Major grocery store chain Safeway has agreed to be acquired by an investment group led by Cerberus Capital Management, the owner of several supermarket chains.
The acquisition is worth about $7.64 billion in cash and, pending other transactions, could top more than $9 billion.
The deal, announced late Thursday, will bring together Safeway and Albertsons.
Last year, Cerberus bought the Albertsons stores it didn’t already own from Supvalu Inc., along with four other Supervalu chains.
The purchase comes amid ongoing consolidation in the supermarket industry, which is facing growing competition from big-box retailers, specialty chains, drug stores, and even dollar stores. Kroger Co., a key competitor, recently snapped up regional chain Harris Teeter.
Safeway said in February that it was looking into putting itself up for sale. The Pleasanton, Calif.-based company has been trying to adapt for some time to increased competition and recently shed some of its smaller, less profitable units, such as its Canadian operations and Dominick’s stores in Chicago.
The company has more than 1,300 U.S. locations under banners including Safeway, Vons, Pavilion’s, Randall’s, Tom Thumb and Carrs.
AB Acquisition LLC, which operates Albertsons, along with Acme, Jewel-Osco, Lucky, Shaw’s and other stores, is owned by Cerberus and other investors. It operates more than 1,000 stores. Albertsons is based in Boise, Idaho.
Combined, the companies will have more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants.
Safeway and Albertsons say the deal “will allow them to better respond to customer needs and lower costs.” They also expect to refurbish some stores and expand product offering,s once the deal is complete.
The deal is expected to close in the final three months of this year. It still needs the approval of Safeway shareholders and federal regulators.
Safeway shareholders will receive $32.50 per share in cash. Pending other actions, the company says the deal is worth roughly $40 per share to stockholders.
