US supermarket chain Safeway in talks over possible sale
20 Feb 2014
Safeway Inc yesterday said that it is in talks about a possible sale of the company – a deal where buyers may have to pay more than the US supermarket chain's market value of $8.4 billion.
''Safeway today announced it is in discussions concerning a possible transaction involving the sale of the company. Although the discussions are ongoing, the company has not reached an agreement on a transaction, and there can be no assurance that these discussions will lead to an agreement or a completed transaction,'' the California-based company said in a statement.
Reuters had reported in October 2013 that buyout firms, including Cerberus Capital Management, have been exploring a deal for all or part of Safeway, and yesterday said that Cerberus is currently in talks with Safeway about a possible transaction.
The move to sell itself comes after Safeway adopted the ''poison pill'' strategy in September last year in order to block a hostile takeover from activist hedge fund Jana Partners, who had amassed a 6.2-per cent stake and has been urging the company to exit from some unprofitable regions and shed some subsidiaries and return more capital to investors.
Safeway has spun off its gift-card unit Blackhawk Network Holdings by selling a 19-per cent stake, but Jana wants Safeway to sell the remaining stake in Blackhawk.
Safeway has since sold its Canadian operations to Empire Co Ltd for $5.8 billion and plans to exit the Chicago market by early this year.
Yesterday it also announced that it would distribute the remaining 72.2 per cent of its holding in Blackhawk to Safeway stockholders, on a pro rata basis to all Safeway stockholders in a transaction intended to be tax-free to Safeway and its stockholders, and is also looking at alternatives including a sale for its 49-per cent stake in Mexican food and general merchandise retailer Casa Ley S.A.
Safeway operates about 1,400 grocery stores in the US under its own name and regional chains such as Vons and Randalls.
