Safeway, the country's second-largest supermarket chain, was sold to an investment group led by private equity firm Cerberus Capital Management that owns Albertsons, and Safeway will merge with the grocer.
Cerberus Capital Management purchased Safeway for $9 billion, merging Safeway with the nation's fifth largest supermarket, Albertsons, for a total of 2,400 stores nationwide, according to Bloomberg News.
Cerberus also operates brands like Acme, Jewel-Osco and Shaw.
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The merger still falls behind supermarket leader Kroger, which has more than 2,600 stores nationwide. Cerberus told USA Today that no Safeway or Albertsons
stores are targeted to be closed, but some may be sold if the Federal Trade Commission mandates it.
Cerberus is using the merger not only to compete with Kroger, but to fend off other competition.
"Big-box retailers such as Wal-Mart Stores Inc. and warehouse clubs are increasingly targeting grocery customers, using their size and breadth of products to attract shoppers," Bloomberg News reported. "Online food sellers and delivery services, including Amazon.com Inc., also have made neighborhood supermarkets less essential than before."
Safeway chief executive Robert Edwards, who will lead the merged chains, told reporters in a conference call that the merger will give the company a competitive edge in the market.
"This merger will improve our competitive position," Edwards told Bloomberg News. "Our customers will benefit from significant cost saving synergies and a stronger management team."
Albertsons' chief executive officer Bob Miller said in a statement on Cerberus's website
that the combining Safeway and Albertsons will result in better prices for customers.
"This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country," Miller said. "Robert Edwards and his team have done an outstanding job in positioning Safeway's core business for success, by investing in its stores and creating innovative strategic marketing programs that contribute to shareholder value. Working together will enable us to create cost savings that translate into price reductions for our customers."
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