US retailer Safeway Inc has moved to block a potential hostile takeover by investment vehicle Jana Partners, LLC.
In a regulatory filing, Safeway said it has adopted a one-year stockholder rights plan providing shareholders with the right to buy additional shares at a discount if one shareholder buys 10% of the retailer’s shares.
If Safeway is acquired in a transaction not approved by the board, the retailer’s shareholders will also have the right to acquire shares in the acquiring company, Safeway added.
The adoption of the so-called poison pill comes after Jana disclosed a 6.2% activist stake in Safeway.
“The company has become aware of an accumulation of a significant amount of the common stock of the company,” Safeway said. “The board of directors believes that the rights plan will help promote the fair and equal treatment of all stockholders of the company and ensure that the board remains in the best position to discharge its fiduciary duties.”
Safeway also moved to defend the strategic direction that management is pursuing. It pointed to moves, including an IPO of Blackhawk and the sale of its Canaidan operations, it believes will allow it to maximise shareholder returns.
“The board believes that the rights plan will help ensure that the company can continue to implement its strategic plan and maximise the long-term value of the company for all shareholders.”
While the company has come under sustained pressure, with declining first half sales and earnings, the group has remained upbeat on its full year outlook. Safeway forecast adjusted 2013 full-year EPS of $1.02-$1.12, up from $0.99 in 2012. Including the benefit from the Blackhawk IPO and sale of the Canadian business, EPS is expected to rise to $2.25-$2.45.