Safeway, the second-largest grocer in the U.S., has been sold to Cerberus Capital Management in a deal valued at around $9.4 billion. Following the completion of the transaction in Q4 Safeway will merge with fellow-Cerberus holding Albertsons. The merger will allow for greater costs savings and ultimately price reductions.
Bob Miller, Albertsons current CEO, will become executive chairman, while Robert Edwards, Safeway's current president and CEO, will become president and CEO of the combined company.
"This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country," Miller said. "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."
Safeway shareholders are expected to receive an estimated $40 per share. Share prices have been on the rise since the grocery announced its intentions to sell last month. The price being paid to current stock holders represents a 25% gain over the pre-announcement price.
"This merger is one of several actions we have taken in recent months as a result of our strategic business review," Edwards said. "The transaction 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. We are excited about continuing this momentum as a combined organization."
The merger creates a diversified network that includes over 2,400 stores, 27 distribution facilities and 20 manufacturing plants with over 250,000 dedicated and loyal employees. No store closures are expected as a result of this transaction.
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