Reuters has reported that Safeway Inc. is in advanced discussions with Cerberus Capital Management LP regarding a leveraged buyout of the nation’s second-largest grocery chain.


Reuters, Safeway Inc., Cerberus Capital Management LP, Albertsons LLC, Supervalu Inc., Albertsons Inc., American Stores Co., Albertsons, Jewel-Osco, Acme Markets, Shaw’s Supermarkets, Star Markets, Albertsons LLC, Vons
















































































































































































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Cerberus-Safeway deal reported close

February 21st, 2014

NEW YORK – Reuters has reported that Safeway Inc. is in advanced discussions with Cerberus Capital Management LP regarding a leveraged buyout of the nation’s second-largest grocery chain.

Safeway announced on Wednesday that it is involved in discussions involving a possible sale when it released its fiscal 2013 financial results, but provided no details.

According to Reuters, the two companies have been in discussions for several months and are now negotiating an agreement by which Cerberus would buy Safeway in its entirety. Cerberus presently owns Boise, Idaho-based Albertsons LLC.

Last March a Cerberus-led private investment group acquired from Supervalu Inc. five grocery chains that had previously been owned by the now-defunct Albertsons Inc. and American Stores Co. Those chains — Albertsons, Jewel-Osco, Acme Markets, Shaw’s Supermarkets and Star Markets — are now part of Albertsons LLC.

Citing "people familiar with the matter," Reuters claims that Cerberus has proposed a variety of transactions, including purchase of parts of Safeway as well as the whole company, but Safeway prefers to sell the entire company. An acquisition would become one of the largest leveraged buyouts since the most recent financial crisis.

Safeway presently has market capitalization of about $8.89 billion and total debt of $5.57 billion.

One possible hurdle in such a deal would be antitrust issues in Southern California, where Safeway operates the Vons supermarket chain, which competes directly with Albertsons. Substantial divestitures might be required to clear the way for the acquisition.

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