AB Acquisition will spend more than $9 billion for grocery store giant Safeway (SWY) in a deal that AB says will pay out $40 per share and create a grocery company with thousands of stores and 250,000 workers.
“This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country,” says Albertsons chief executive, Bob Miller, who will lead the combined organization, in a statement.
According to the same statement, Safeway shareholders will receive an estimated $40 per share, including $32.50 per share in cash. With about 235 million Safeway shares, that puts the value of the deal at about $9.4 billion.
The merger will create a company with more than 250,000 workers spread among its 2,400 stores, 27 distribution facilities, and 20 manufacturing plants when the deal is expected to close in the fourth quarter of this year.
Safeway, which was founded in 1926, earned about $3.5 billion in profits on more than $36.1 billion in revenue in 2013, according to its Securities and Exchange Commission filings.
The chain had 1,335 stores by the end of 2013, plus owns its own facilities for producing milk, baked goods, ice cream, soda, and other grocery items.
Safeway also owns 49 percent of Casa Ley S.A. de C.V., the fifth-largest food and general merchandise retailer in Mexico. Safeway also controls the Vons, Pavilion’s, Randall’s, Tom Thumb and Carrs stores, according to Cerberus.
AB Acquisition operates stores under the Albertsons, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, and Super Saver names. It’s owned by a group of investors led by Cerberus Capital Management, which includes former Vice President Dan Quayle among its senior leadership.