Disappointed: Deal struck to merge Safeway with Albertsons
Although I understand that the grocery business is very competitive and there can be limited profit margin, merging companies can increase the purchasing power of the companies and help to lower the general bottom line not just for the company but for the consumer as well, I hate Albertsons. They were overpriced with low value merchandise. I love Safeway. I would never shop at another grocery store, ever. Having said that, here’s the details on the details of the tenative deal.
Deal struck to merge Safeway with Albertsons
Safeway, the nation’s No. 2 supermarket chain, will be acquired for $9 billion by an investor group led by private equity firm Cerberus Capital Management.
The deal, announced Thursday, will merge Safeway with grocer Albertsons. The Idaho-based grocer, the fifth-largest chain, is controlled by Cerberus, which acquired about 900 Albertsons, Acme, Jewel-Osco and chains from Supervalu for $3.3 billion. No store closures are expected.
Albertsons LLC, with executive chairman Bob Miller at the controls, worked to put the deal together.
The company owned about 500 stores in the south just a few years ago, and with this latest deal, it now owns over 2,400 stores across America with 250,000 employees.
And at the top of the chain with Miller is CEO Bob Butler. Both Idaho men who were hired by Joe Albertson a long time ago.
An Albertsons spokesperson says that the names of the Safeway stores won’t change.
“This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country,” said Miller. “It also brings together two great organizations with talented management teams.”
Safeway CEO Robert Edwards will become CEO of the new firm, while Albertsons CEO will become executive chairman. “There is a clear and compelling rationale for this merger,” Edwards said in an investor conference call. “This merger will improve our competitive position…cost savings and lower consumer prices.”
The deal is the latest in a series of acquisitions and buyouts that is shaping the increasing competitive supermarket industry, squeezed by rising costs and competition from traditional rivals, warehouse clubs and upscale chains such as Whole Foods Market. Cerberus tried to buy the 200 store Harris Teeter chain in 2013, but couldn’t match a $2.5 billion bid by Kroger.
Safeway shares, which have been rising on a potential buyout bid, closed up 2 cents to $39.50 a share Thursday. That’s close to the Cerberus bid, worth about $40 a share. Safeway shareholders will receive $32.50 a share in cash, plus the rights from asset sales worth $3.65 a share. They’ll also receive shares in spinoff Blackhawk Network Holdings, a gift card company, worth $3.95 a share per Safeway share. Safeway owns a 72% stake in Blackhawk.
Safeway shares are up 17% since Feb. 18, when management said it was exploring a sale with an unnamed suitor. Kroger had expressed interest in acquiring some of Safeway’s 1,335 stores.
Kroger reported fourth-quarter earnings earlier Thursday. In a conference call with stock analysts, management did not address specific acquisition plans.
Edwards said Safeway would accept other bids over the next three weeks. Asked if there had been interest from other suitors, Edwards declined to comment.
by Gabrielle Kratsas and Gary Strauss, USA TODAY & Mark Johnson, KTVB, Posted on March 6, 2014 at 4:01 PM ; Updated today at 4:21 PM.
And further details were reported by the LA Times: http://www.latimes.com/business/money/la-fi-mo-albertsons-cerberus-safeway-grocery-20140306,0,3992938.story#axzz2vF49zkp5
Posted on March 6, 2014, in Business News, News & Politics and tagged $9 billion, albertson's, Cerberus Capital Management, executive chairman Bob Miller, grocery, grocery store, kroger, merger, safeway, Safeway CEO Robert Edwards, safeway merge with albertsons, safeway shares. Bookmark the permalink. Comments Off on Disappointed: Deal struck to merge Safeway with Albertsons.