Nation & World News

Grocery Chains Safeway And Albertson’s Announce Merger Deal

By Scott Neuman on March 6th, 2014

Private equity firm Cerberus Capital Management has offered to buy Safeway, Inc., the nation’s second-largest grocery chain, for a reported $9.4 billion. Cerberus plans to merge Safeway with another grocer, Albertson’s.

“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,” Safeway CEO Robert Edwards said in a statement. “We are excited about continuing this momentum as a combined organization.”

“This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country,” Albertsons CEO Bob Miller said. “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.”

USAToday writes:

“Last March, Cerberus led a investment group that acquired about 900 Albertsons, Acme, Jewel-Osco , Shaw’s and Star Market stores from Supervalu. That deal, which included a stake in Supervalu, was worth about $3.3 billion. Cerberus earlier acquired about 600 Albertsons supermarkets.”

“It also sought to buy the Harris Teeter chain, but was outbid by Kroger, the nation’s largest supermarket operator, which paid about $2.5 billion.”

“Safeway acknowledged buyout interest Feb. 18, saying management was in ‘discussions concerning a possible transaction involving the sale of the company.’ At the time, Safeway did not disclose suitors.”

Reuters says the merger would “[create] a dominant grocery franchise on the West Coast. It also creates a grocery network of more than 2,400 stores and 250,000 employees.”

The news agency reports that no store closures are expected.

But Forbes says Kroger, the top grocery chain in the country by revenue, is “reportedly considering making its own offer for its competitor.”

Forbes says Kroger “[previously] outbid Cerberus for the Harris Teeter chain of supermarkets, paying $2.4 billion last summer.”

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