Albertsons merges with Safeway grocery store chain

Safeway Inc. and Albertsons has announced a definitive agreement under which AB Acquisition LLC will acquire all outstanding shares of Safeway.

AB Acquisition is the owner of Albertson’s LLC and New Albertson’s, Inc.

As a result of the merger, plus other actions to be taken by the Safeway board of directors, including the separate sales of certain other primarily non-core assets, and the distribution of Blackhawk shares, Safeway shareholders are expected to receive total value estimated at $40 per share.

Albertsons’ Chief Executive Officer Bob Miller stated, “This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country.

“It also brings together two great organizations with talented management teams. Robert Edwards and his team have done an outstanding job in positioning Safeway’s core business for success, by investing in its stores and creating innovative strategic marketing programs that contribute to shareholder value.

“Working together will enable us to create cost savings that translate into price reductions for our customers,” said Miller.

“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,” he added.

Edwards, President & Chief Executive Officer of Safeway Inc., said, “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 organization. We look forward to working with Bob Miller and the rest of the Albertsons team as we proceed together on a path towards becoming an even stronger organization,” Edwards said.

The merger will create a diversified network that includes more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants with more than 250,000 employees.

No store closures are expected as a result of this transaction.

Miller will become Executive Chairman. Edwards will become President and Chief Executive Officer of the combined company.

Banners will include Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, Super Saver, United Supermarkets, Market Street and Amigos.

The merger, indicated Miller and Edwards, will create a diversified network of retail assets, associated distribution centers and manufacturing assets that will allow for a broader assortment of products, a more efficient distribution and supply chain, enhanced fresh and perishable offerings, and expanded private label alternatives for customers.

“Albertsons has success-

fully transformed under-performing retail grocery stores into strong performers by focusing on enhancing the local customer experience,” said Lenard Tessler, Co-Head of Global Private Equity and Senior Managing Director at Cerberus.

“Similarly, Safeway has consistently provided out-

standing value and customer service throughout the communities it serves.  Combining these strong management teams will strengthen the ability of Safeway and Albertsons to deliver on a shared commitment to offering customers higher quality products at lower prices, which will undoubtedly yield positive results for all stakeholders in the business,” said Tessler.

The merger is expected to close in the fourth quarter of 2014 following the satisfaction of customary closing conditions.

The merger agreement includes a so-called “go-shop” period, during which Safeway, with the assistance of Goldman Sachs, its financial advisor, will actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals. The initial go-shop period is 21 days. For a 15-day period following the termination of the go-shop period, Safeway will be permitted to continue discussions and enter into or recommend a transaction with any person that submits a qualifying proposal during the 21-day period.

Safeway Inc., which operates Safeway, Vons, Pavilion’s, Randall’s, Tom Thumb and Carrs stores, is a Fortune 100 company and one of the largest food and drug retailers in the United States with sales of $36.1 billion in 2013. The company operates 1,335 stores in 20 states and the District of Columbia, 13 distribution centers and 20 manufacturing plants, and employs approximately 138,000 employees.

Established in 2006, AB Acquisition LLC (Albertsons) operates ACME, Albertsons, Jewel-Osco, Lucky, Shaw’s, Star Market and Super Saver, and stores under the United Family of stores, Amigos, Market Street and United Supermarkets.



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