Albertsons Grocery Combines With Safeway to Create 2,400+-Store Chain

by Christopher Freeburn | March 7, 2014 10:00 am

Albertsons Grocery Combines With Safeway to Create 2,400+-Store Chain

Cerberus Capital Management has announced a deal to acquire supermarket chain[1] Safeway (SWY[2]). Despite the news, SWY stock fell 3% in Friday morning trading.

3173128472 1422bfda61 300x225 Albertsons Grocery Combines With Safeway to Create 2,400+ Store Chain[3]
Source: Flickr[4]

Under terms of the deal, Cerberus, which owns Albertsons supermarkets, will pay $40 a share for Safeway, valuing the merger at $9 billion. Albertsons operates about 1,000 stores, while Safeway has about 1,600 stores. The combined company will employ more than 250,000 workers, the Los Angeles Times notes.

Safeway’s board of directors has approved the acquisition.

The merger with Safeway will allow Albertsons to compete more effectively with supermarket giant Kroger (KR[5]), which operates 2,640 stores. Safeway announced that it was looking for a buyer in February[6].

Earlier this week, it was reported that Kroger was in talks to acquire some Safeway locations[7], though an inside said that Safeway was looking for a single buyer for the whole company.

Last year, Kroger paid $2.5 billion in cash to acquire[8] Harris Teeter Supermarkets, giving it a larger footprint in Southeastern and Mid-Atlantic states.

Endnotes:
  1. a deal to acquire supermarket chain: http://www.latimes.com/business/money/la-fi-mo-albertsons-cerberus-safeway-grocery-20140306,0,3992938.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fmostviewed+(L.A.+Times+-+Most+Viewed+Stories)#axzz2vHvJAdgn
  2. SWY: http://studio-5.financialcontent.com/investplace/quote?Symbol=SWY
  3. [Image]: http://investorplace.com/wp-content/uploads/2012/04/3173128472_1422bfda61.jpg
  4. Flickr: http://www.flickr.com/photos/mediafury/3173128472/in/photostream/
  5. KR: http://studio-5.financialcontent.com/investplace/quote?Symbol=KR
  6. looking for a buyer in February: http://investorplace.com/2014/02/safeway-supermaket-chain-for-sale/#.Uxnd8dxhOf0
  7. was in talks to acquire some Safeway locations: http://investorplace.com/2014/03/kroger-safeway-kr-stock-swy-stock/#.UxncgtxhOf0
  8. paid $2.5 billion in cash to acquire: http://investorplace.com/2013/07/kroger-buys-harris-teeter-a-smart-move/#.UxncgdxhOf0

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