Safeway and Albertsons announced plans to merge yesterday. Under the terms of the deal, which was unanimously approved by Safeway’s board of directors, Albertons’ owners AB Acquisition will acquire all outstanding shares in the Californian retailer. AB Acquisition is controlled by private equity firm Cerberus Capital Management.
Safeway shareholders are expected to receive around US$40 per share as a result of the merger along with other actions taken by the retailer including the sale of other non-core assets and the distribution of Blackhawk shares.
“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 Albertsons’ CEO Bob Miller.
He said by working together, the retailers would be able to create cost savings that translate into price reductions for its 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,” he added.
Speaking to KTVU yesterday, an Albertsons spokeswoman said that if the proposed merger succeeds, it would not involve any store closures, changes to the Safeway name or changes to the Safeway rewards programme.
Robert Edwards, president and CEO of Safeway, said the deal is one of several actions the company has taken in recent months as a result of a strategic business review.
“The combined value of the transactions described above is expected to deliver a premium to Safeway’s shareholders of 72 per cent from one year ago, and 56 per cent over the share price six months ago,” he said.
“Safeway has been focused on better meeting shopper’s 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 organisation.”
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