Safeway Sold: Mega Merger With AlbertsonsBy: Tina Volpe - March 7, 2014
Safeway Inc. began as Skaggs, which opened its first store in 1915 and grew into Safeway in 1926.
Safeway grew to be the second-largest U.S. mainstream grocery store operator in the United States, boasting 1,335 stores located throughout the western and central United States. Today, a private equity firm Cerberus Capital Management acquired the company in a deal valued at about $9.4 billion.
The merger is creating a company that will eventually be employing more than 250,000 workers in its 2,400 stores. Distribution will now total 27 facilities, and 20 manufacturing plants when the deal is expected to close in the fourth quarter of this year.
“This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country,” says Albertsons chief executive, Bob Miller, who will lead the combined organization, in a statement.
The statement also indicated that Safeway shareholders will receive an estimated $40 per share, including $32.50 per share in cash.
Although the company earned about $3.5 billion in profits on more than $36.1 billion in revenue in 2013, according to its Securities and Exchange Commission filings, Safeway has been below the market average in sales per square foot.
The company owns its own facilities for producing milk, baked goods, ice cream, soda, and other grocery items.
Safeway also owns 49 percent of Casa Ley S.A. de C.V., the fifth-largest food and general merchandise retailer in Mexico. It also controls the Vons, Pavilion’s, Randall’s, Tom Thumb and Carrs stores, according to Cerberus.
AB Acquisition operates stores under Albertsons, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, and Super Saver names. It’s owned by a group of investors led by Cerberus Capital Management, which includes former Vice President Dan Quayle among its senior leadership.
Safeway stores will not be rebranded, according to Albertsons spokeswoman Christine Wilcox.
“Safeway is a fantastic brand with a loyal customer base and dedicated employees, and we have no current plans to change Safeway banners,” Wilcox said.
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