Huge sale: Safeway
Struggling Pleasanton chain strikes deal with investment firm that owns Albertsons
Pleasanton grocery chain — the second-largest in the nation — strikes a $9.2 billion deal with the investment firm that owns Albertsons.
Safeway agreed to be bought by Cerberus Capital Management’s Albertsons grocery-store chain in a deal valued at about $9.2 billion.
Safeway investors will receive about $40 a share, consisting of $32.50 a share in cash, plus other considerations and stock in Blackhawk Network Holdings Inc., the companies said Thursday.
Safeway said last month that it was in discussions about a potential sale of the company. The chain has recently divested assets, including its Canadian stores and gift-card unit, as it struggles to increase sales. Safeway revenue increased 0.2 percent to $36.1 billion last year, trailing the industry.
Safeway, based in Pleasanton, fell 5.5 percent to $37.30 at in late trading in New York. The shares had gained 21 percent this year through the close of regular trading Thursday, while the Standard & Poor’s index has increased 1.6 percent.
Safeway is the largest U.S. grocery-store chain after Kroger Co.
Cerberus led an investor group last year
that acquired Supervalu Inc.’s Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market grocery stores in a transaction valued at about $3.3 billion. The buyout firm wants to add Safeway to its portfolio to gain economies of scale and market presence, people familiar with the situation have said.
Private-equity firms CVC Capital Partners and Leonard Green & Partners also have expressed interest in buying parts of Safeway, people familiar with the matter said last month. Leonard Green and CVC, which jointly own big-box wholesale chain BJ’s Wholesale Club Inc., could team up to do a deal, one of the people said then.
KKR & Co. bought Safeway in 1986 for about $4.3 billion, according to data compiled by Bloomberg. The retailer went public in 1990.
Safeway has been simplifying its operations and recently sold its 72 Dominick’s stores in the Chicago area after divesting itself of its Canadian business and conducting an initial public offering of giftcard unit Blackhawk Network Holdings Inc.