Safeway (NYSE:SWY) said Wednesday it is in talks that could lead to the company's sale. The supermarket chain hasn't yet reached an agreement on a transaction, but the news of the possible deal finally cleared up the rumors that surfaced in October, after the chain deflected a takeover bid.
Safeway, the nation's second largest grocer, is also postponing its investor conference as a result of the developments. The meeting had been scheduled for early March.
Buyout rumors began last fall when Reuters reported that private equity firm Cerberus Capital Management LP was involved in talks to buy some or all of Safeway. Cerberus owns a supermarket business that operates Albertsons, Shaw's and Jewel-Osco.
Safeway has been divesting assets in order to revamp its business in the face of increasing competition. Last June, Safeway sold its entire Canadian unit to Sobey's for $5.7 billion. Then in October, Safeway put all its Dominick's stores up for sale. Months later, more than 40 of the 72 total locations that didn't find buyers were left vacant when they closed in December. The remainder went to competitors including Jewel-Osco, Mariano's and Whole Foods (NASDAQ: WFM).
The announcement of a possible Safeway sale was made during the retailer's fourth-quarter earnings report. For the 16-week fourth quarter ended Dec. 28, net income on continuing operations (excluding Safeway Canada and Dominick's) fell 41.4 percent to $100 million. Sales rose 0.8 percent to $11.3 billion and comp-store sales, excluding fuel, rose 1.6 percent.
Safeway said it has implemented a variety of store initiatives to help drive sales, including clustering, localization and personalization. These efforts are underway at 200 out of 1,300 Safeway locations, and are part of the chain's commitment to deliver more value to consumers while boosting operating income and market share.
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