PLEASANTON, Calif. (AP) — Safeway says it has agreed to be acquired by an investment group led by Cerebus Capital Management, the owner of Albertsons and several other supermarket chains.
The acquisition is worth about $7.64 billion in cash, and pending other transactions could top more than $9 billion.
It comes amid ongoing consolidation in the supermarket industry, which is facing growing competition from big-box retailers, specialty chains, drug stores and even dollar stores.
Cerberus bought five chains including Albertson's and Jewel-Osco from Supervalu Inc. last year. Kroger Co. also recently snapped up regional chain Harris Teeter.
Safeway shareholders will receive $32.50 per share in cash. Pending other deals, the company says the deal is worth roughly $40 per share to stockholders.
According to KATU's news partner, The Portland Business Journal, the move will create a single company of 2,400 stores, and the deal isn't expected to result in any store closures.
Currently there are 20 Albertsons stores and 19 Safeway stores in the Portland area, the Journal reported.
Additionally, the former CEO of Portland-based Fred Meyer, Bob Miller, will become the combined company's executive chairman.
Shares of Pleasanton, Calif.-based Safeway Inc. closed at $39.47 Thursday.
KATU News spoke with PSU Professor and food industry expert Tom Gillpatrick about the merger.
“I think it’s a good thing for the industry,” Gillpatrick said. “I think it’s a good thing for employees, and I think we’ll have a more vital competitor that comes out of this.”
Gillpatrick points out that Albertsons and Safeway are mid-size companies separately, which makes it harder to compete with larger competitors like Wal-Mart, Kroger and Costco. He agrees with the company's statements that the merger could mean lower prices because it will make both stores more efficient.
“I'll never tell anybody not to worry; never say never,” he said. “But I think we'll look forward a couple years from now, and consumers will be very happy with the outcome.”
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