Snack and Bakery

Safeway, Albertsons to merge

March 10, 2014

Safeway Inc., Pleasanton, Calif., and Albertsons, Boise, Idaho, announced a definitive agreement on March 6 under which AB Acquisition LLC will acquire all outstanding shares of Safeway. The merger agreement was unanimously approved by Safeway’s board of directors, and the merger is expected to close in the fourth quarter of 2014, following the satisfaction of customary closing conditions.

AB Acquisition is the owner of Albertson’s LLC and New Albertson’s Inc. and is controlled by a Cerberus Capital Management L.P. (“Cerberus”)-led investor group. It plans to fund the merger, in part, with debt financing of approximately $7.6 billion, equity contributions from its current investors and their affiliates, partners and co-investors of approximately $1.25 billion, and cash on hand of Safeway.

“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’ CEO Bob Miller. “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. 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.”

Robert Edwards, president and CEO of Safeway Inc., notes: “This merger is one of several actions we have taken in recent months as a result of our strategic business review. The combined value of the transactions described above is expected to deliver a premium to Safeway’s shareholders of 72% from one year ago, and 56% over the share price six months ago. 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.”

Miller will become executive chairman, and Edwards will become president and CEO of the combined company.

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.

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.