US: Albertsons owner Cerberus to buy Safeway
The combined company will have over 2,400 stores
US grocery giant Safeway Inc has agreed to a takeover bid from private-equity firm Cerberus Capital Management, the owner of chains including Albertsons, Acme and Jewel-Osco.
Safeway said last month it was in talks with an interested party over a possible deal. Cerberus had been speculated to be working on a bid, although had not made any public comment. Safeway rival Kroger had also been said to have been interested in the business, which runs 1,335 stores in 20 states.
However, just before 5pm ET in the US yesterday (6 March), a deal worth an initial $32.50 a share was announced.
The takeover, backed unanimously by the Safeway board, would create a retailer with over 2,400 stores, 27 distribution facilities and 20 manufacturing plants. Over 250,000 staff would work for the combined company.
Albertsons CEO Bob Miller will become the group's executive chairman. Robert Edwards, Safeway's president and CEO, will take the two roles at the combined company.
Cerberus has built a retail network in the main through two deals with another US grocer, Supervalu Inc.
In 2006, a Cerberus-led consortium acquired 661 stores from Supervalu. Last year, Cerberus went back and bought five supermarket chains from Supervalu.
Miller said: "Working together will enable us to create cost savings that translate into price reductions for our customers. Together, we will be able to respond to local needs more quickly and deliver outstanding products at the lowest possible price, more efficiently than ever before."
Edwards added: "Safeway has been focused on better meeting shoppers' diverse needs through local, relevant assortment, an improved price/value proposition and a great shopping experience that has driven improved sales trends. We are excited about continuing this momentum as a combined organisation."
Safeway shareholders are also set to receive around $3.65 a share from two other transactions - the sale of the assets of real-estate development subsidiary Property Development Centers and its 49% stake in Mexican retailer Casa Ley.
Safeway insisted the Cerberus takeover does not alter its plan to distribute the remaining 37.8m shares in pre-paid payment provider Blackhawk it owns to its shareholders in mid-April.
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