Private equity firm Cerberus Capital Management on Thursday confirmed a deal to purchase Safeway (NYSE:SWY) for more than $9 billion. The merger agreement was unanimously approved by Safeway's board of directors.
The acquisition will create a diversified network of grocery retailers that includes more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants and roughly 250,000 employees. In contrast, Kroger, the largest grocer in the U.S., has 2,600 stores. No store closures are expected as a result of this transaction, the company said.
The combined grocery chain will also be an opportunity for the stores to offer a wider assortment and achieve operational savings and ultimately lower prices for consumers, said Albertsons' CEO Bob Miller. Miller will become executive chairman of the new company.
"As our customers need change, we have to adapt (to) a world where they have more options than ever." said Miller.
Safeway CEO Robert Edwards will become CEO of the new firm.
The merger announcement comes just days after Kroger, the nation's largest grocery store chain, reportedly expressed interest in acquiring some of Safeway's 1,335 stores. It's unclear how the Cerberus offer will affect Kroger's pursuit, however, sources close to the matter report that Kroger could still offer a bid despite the Safeway deal with Cerberus being confirmed.
The move is the latest in grocery store shakeups and mergers. In October, Kroger outbid Cerberus to acquire Harris Teeter for $2.5 billion just months after Cerberus bought about 900 Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores from Supervalu for $3.3 billion.
-See this Safeway and Albertsons press release
Safeway stock rallies on buyout rumors; debt concerns rise
Investors happy about Safeway shedding Dominick's
Safeway Canada sells out to Sobey's for $5.7 billion
Whole Foods confirms plan to buy 7 former Dominick's stores in Chicago
Safeway will pay $600K for pollution violations