Safeway Inc. (NYSE:SWY) To Become Part Of Cerberus Capital

by Sean Patterson | Monday, Mar 10, 2014 | 858 views

Boston, MA, 03/10/2014 – Safeway Inc. (NYSE:SWY) has announced that it will be taken by Cerberus Capital for $9.4 billion. Safeway Inc. has been a prime candidate for high-powered acquisition, considering it is one of the largest grocery store operators, nearly second on the line-up, in the country.

Safeway Inc. (NYSE:SWY) will be acquired by Cerberus Capital Management for $9.4 billion. The price the company offers is $40 per share. The premium the equity firm will pay for the acquisition is $39.47, on the NYSE.

The new developments will now mean Safeway is part of the Cerebus Albertsons chain and will now become owner of a large-sized grocery franchise across the West Coast. The grocery network now operates 2,400 stores and employs over 250,000 workers. It is also possible that the combination of the two teams will not result in store closures.

The Safeway shareholder is now expected to receive $32.50 for a share, in cash format itself. The other distributions will be at a value of$3.65 per share. Additionally, Cerebus which is viewed as an investor with diversified interests will move on the supermarket sector.

Safeway Inc. (NYSE:SWY) acquisition, will now add further to Cerberus’s already well-defined investments. In the most recent run-up, Cerebus was found to have moved up the investor line-up for grocery groups by the acquisition of Supervalu Inc., besides Albertsons and Jewel-Osco valued at $3.3 billion.

For the company, the Albertson acquisition was a value addition. It previously held 650 locations as part of its earlier 2006 partnership with the company. After the chain was acquired, he stores were broken up into private equity investors as well as Supervalu and CVS Caremark Corp.

For Safeway it is not for the first time that it has been under the ownership of private equity. Back in 1986, it was owned by KKR & Co. LP, however, Safeway Inc. (NYSE:SWY) was known to have sold its stake in 1999.

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