It looks like Vons and Albertsons, two dominant store brands in Las Vegas, soon will have the same owner.
Safeway Inc. and Albertsons announced Thursday a definitive agreement under which AB Acquisition LLC will acquire all outstanding shares of Safeway. The former owns Albertsons and is controlled by a Cerberus Capital Management L.P.-led investor group, which also includes Kimco Realty Corp., Klaff Realty LP, Lubert-Adler Partners LP, and Schottenstein Stores Corp.
Safeway owns all local Vons stores.
The acquisition is worth about $7.64 billion in cash, and pending other transactions could top more than $9 billion.
It 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.
“This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country,” Albertsons’ Chief Executive Bob Miller said in a statement. “Working together will enable us to create cost savings that translate into price reductions for our customers. Together, we will be able to respond to local needs more quickly and deliver outstanding products at the lowest possible price, more efficiently than ever before.”
As a result, the merger will create a network that includes more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants with more than 250,000 employees. No store closures are expected as a result of the transaction.
Besides Vons and Albertsons, store brands will include Safeway, Pavilions, Randalls, Tom Thumb, Carrs, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, Super Saver, United Supermarkets, Market Street and Amigos.
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.
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 its product offerings once it is complete.
The deal is expected to close in final three months of this year. It still needs the approval of Safeway shareholders and federal regulators. Safeway can still actively review other proposals in the coming weeks.
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.
Shares of Safeway Inc. closed at $39.47 Thursday. Its shares closed at $34.10 on February 18, the day before Safeway announced it was in talks regarding a potential sale.
The stock fell $1.33, or more than 3 percent, to $38.14 in after hours trading after the deal was announced Thursday.
Albertsons CEO Miller will become executive chairman of the combined business. Robert Edwards, Safeway’s president and CEO, will become president and CEO of the combined company.
The companies said it is too early to determine where it will be based and exactly what its operations will look like following the deal.
The Associated Press contributed to this report. Contact reporter Laura Carroll at email@example.com or 702-380-4588. Follow @lscvegas on Twitter.