Thursday, March 6, 2014

Report says Kroger may be disrupting Safeway-Cerberus deal

3/7/14 Update: Cerberus to merge Albertsons with Safeway in $9 billion deal

In contrast to my post on Tuesday that said Kroger may work with Cerberus to take some Safeway stores the private equity firm might not want if they were to buy Safeway (Kroger could be a player in Safeway sale), a story in The Wall Street Journal online yesterday reported that Cerberus' efforts to purchase Safeway have been complicated by Kroger's involvement.

According to the story, Cerberus, which last year purchased Supervalu's Albertsons and Acme chains, among others, had been hoping to make a deal for Safeway this week. However, Kroger, the largest supermarket chain in the country, is now considering a bid on its own for all or part of Safeway. Cerberus is still seen as the most likely buyer, as Kroger could face antitrust issues in areas where the two companies compete.

The Wall Street Journal reports that Cerberus is offering to pay about $40 per share for Safeway, which would make the deal worth approximately $9 billion.

Cerberus and Kroger recently competed for Harris Teeter Supermarkets, and Kroger emerged victorious, paying $2.4 billion for the chain.

Safeway currently operates more than 1,300 stores in the West, Southwest, Rocky Mountain and Mid-Atlantic regions. In the last two years, the company sold or closed all but one of its Genuardi's stores. Last year it sold its Canadian division and closed or sold its 72 Dominick's stores in Chicago.

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