Albertsons, Safeway To Merge

By Kara Murphy, contributing writer, Integrated Solutions For Retailers

Kroger rumored to be interested in making its own offer for Safeway

Albertsons, has a definitive agreement to merge with Safeway Inc. Safeway is the second largest grocer in the United States. Cerberus Capital Management, owner of Albertson’s, bought Safeway for more than $9 billion. If the deal is completed, it will merge with Albertson’s, the fifth largest grocer. The deal will give Safeway shareholders an expected $40 per share, including $32.50 in cash.  The new company will have about $58 billion in revenue, more than 2,400 stores, 27 distribution centers and 20 manufacturing plants.

Mounting competition from warehouse clubs and Wal-Mart has driven the grocers to look at major expansions and partnerships as a way to cut costs and expand their reach. “This merger will improve our competitive position,” said Safeway CEO Robert Edwards, who will become the CEO of the combined company. “Our customers will benefit from significant cost saving synergies and a stronger management team.” Albertson’s CEO Bob Miller will become executive chairman, under the details of the merger.

Forbes reports deal making might continue. Rumors are that Kroger — the country’s largest grocer — is reportedly considering making its own offer for Safeway. Kroger outbid Cerberus in late 2013 for the purchase of the Harris Teeter chain, for which it paid $2.5 billion. If Kroger or another bidder makes an offer, then Safeway has 15 days to enter talks with that bidder, according to the company’s statement.