Cerberus to merge Albertsons with Safeway in $9 billion deal

AB Acquisition, an investor group led by Cerberus Capital Management, agreed to purchase Safeway yesterday for $9 billion, or $40 per share. The transaction is expected to close by the end of the year.

Cerberus plans to fund the acquisition, which is being called an Albertsons - Safeway merger, with debt financing of about $7.6 billion and contributions from partners and co-investors.

According to Supermarket News, the merger will create a company with more than 2,400 stores, 27 distribution facilities, 20 manufacturing plants and over 250,000 employees. No store closures are anticipated for now, although experts believe "divestitures" may be possible since the companies overlap in certain markets, particularly along the West Coast.

Safeway CEO Robert Edwards will become CEO of the combined company.

Combined sales for Safeway and Albertsons in 2013 totaled nearly $60 billion.

Safeway to dispose of Dominick's chain in Chicago

Safeway announced last week that it plans to dispose of its 72 Dominick's supermarkets in the Chicago area. Safeway is also the parent company for Genuardi's, which recently exited the Philadelphia market (with the exception of one yet-to-close store in Audubon, PA).

Dominick's had a loss of $31.5 million for fiscal 2012, and losses are projected to increase this year. Safeway said that selling the chain will likely result in a cash-tax benefit of between $400 - $450 million that it will use to offset expenses from the recent sale of its Canadian assets.

In a separate report, Safeway said there has been interest from several parties for Dominick's, and the company seeks to exit the Chicago market by early 2014.

According to Safeway President and CEO Robert Edwards, "Everything we do is designed to maximize shareholder value, and the sale of Canada, the partial IPO of Blackhawk, and now the decision to leave Chicago demonstrates that commitment."