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It's over! Safeway now owned by Boise-based Albertsons

Safeway stock no longer listed for trading on New York Stock Exchange

AB Acquisition LLC, the owner of Boise-based Albertsons, acquired Pleasanton-based Safeway Friday, with shares of the former Safeway, Inc. also delisted at the same time by the New York Stock Exchange.

Also Friday, the offer to purchase Safeway's Senior Notes due 2019, 2020 and 2021 expired.

The moves come following Federal Trade Commission's clearance of the merger agreement, which was first announced on March 6, 2014.

The FTC's clearance also follows Albertsons' and Safeway's agreement to a proposed consent order, which included a commitment to divest 168 stores.

Those stores are being sold to four FTC-approved buyers. Albertsons and Safeway also agreed to settlements with the attorneys general of California, Nevada and Washington.

Besides its own branded stores, Safeway operated Vons, Pavilions, Randalls, Tom Thumb and Carrs stores, and was a Fortune 100 company and one of the largest food and drug retailers in the U.S. with sales of $35.1 billion in 2013.

AB Acquisition is controlled by an investor group led by Cerberus Capital Management, L.P. ("Cerberus"), which also includes Kimco Realty Corporation (NYSE:KIM), Klaff Realty LP, Lubert-Adler Partners LP, and Schottenstein Stores Corporation.

Established in 2006 when it acquired Albertsons, AB Acquisition LLC also operates ACME, Jewel-Osco, Lucky, Shaws, Star Market and Super Saver, and stores under the United Family of stores, Amigos, Market Street and United Supermarkets.

"We plan to be the favorite local supermarket in every community we serve," said Robert Edwards, who was Safeway's president and chief executive officer and has now become president and CEO of the newly combined company.

"We will do this by knowing, listening to, and delighting our customers; providing the right products at a compelling value and delivering a superior shopping experience," Edwards said. "We will also continue to be active members of our local communities."

Albertsons chief executive officer Bob Miller has been named executive chairman of the new company.

"This is a transformative day for both Albertsons and Safeway. This merger creates a unified, strong organization that is dedicated to bringing a better shopping experience to more customers across the country," Miller said. "Our combined geographic footprint, vast range of brands and products, and service-oriented staff will enable us to meet evolving shopping preferences."

The merger creates a diversified network that includes 2,230 stores, 27 distribution facilities and 19 manufacturing plants with over 250,000 employees across 34 states and the District of Columbia.

The new company is comprised of three regions and 14 retail divisions, supported by corporate offices in Boise, Pleasanton and Phoenix. Banners will include Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw's, Star Market, Super Saver, United Supermarkets, Market Street and Amigos.

With the merger completed, new senior leadership team and division leaders for the combined company also take effect.

"We're drawing on the strong talent within both companies to build an innovative, customer-focused and growth-driven company," Edwards said.

"We are confident in this team's ability to build a great company that's positioned to win over the long term by earning the loyalty of grocery shoppers in every market we serve and delivering superior operational and financial results," Edwards said.

The new leadership team follows:

Bob Gordon, Executive Vice President and General Counsel;

Shane Sampson, Executive Vice President, Marketing and Merchandising;

Andy Scoggin, Executive Vice President, Human Resources, Labor Relations, Public Affairs and Government Affairs;

Jerry Tidwell, Executive Vice President, Supply Chain and Manufacturing;

Wayne Denningham, Executive Vice President and Chief Operating Officer, South Region;

Justin Dye, Executive Vice President and Chief Operating Officer, East Region; and,

Kelly Griffith, Executive Vice President and Chief Operating Officer, North Region.

Lee Wilson has been named executive vice president and chief administrative officer of the new company.

Reporting to him will be Bob Dimond, Executive Vice President and Chief Financial Officer; Justin Ewing, Executive Vice President, Corporate Development and Real Estate, and Barry Libenson, Interim Executive Vice President and Chief Information Officer.

Libenson is expected to be with the new company through March, at which time a successor will be named.

The new company will be comprised of three regions and 14 retail divisions, which will be supported by the three new corporate offices.

The division presidents for the new company, who will report to the chief operating officer for their respective regions, will be:

Dennis Bassler, Portland Division, North Region;

Paul McTavish, Denver Division, North Region;

Susan Morris, Intermountain Division, North Region;

Tom Schwilke, Northern California Division, North Region;

Dan Valenzuela, Seattle Division, North Region;

Shane Dorcheus, Southwest Division, South Region;

Scott Hayes, Southern Division, South Region;

Sidney Hopper, Houston Division, South Region;

Lori Raya, Southern California Division, South Region;

Robert Taylor, United Division, South Region;

Steve Burnham, Eastern Division, East Region;

Jim Perkins, Acme Division, East Region;

Jim Rice, Shaw's Division, East Region;

Mike Withers, Jewel-Osco Division, East Region.

No name changes are planned for any of the stores affected by the merger, including Safeway stores.

"We know the best way to grow our business is to have the highest quality fresh departments, lower prices, clean, well-stocked stores and the best customer service in the market," executive chairman Miller said.

"Our teams will focus on delivering what customers want locally, and we will give our store teams more flexibility to make decisions that are right for their neighborhoods," he added. "The division teams will have the responsibility to have the right assortment for their markets."

As a result of the merger, shareholders of now delisted Safeway stock will receive $34.92 per share in cash, consisting of $32.50 in initial cash consideration,) $2.412 in consideration relating to the previously announced sale of the assets of Safeway's real-estate development subsidiary Property Development Centers and $0.008 in consideration relating to a dividend of approximately $2 million (after deduction for taxes at an assumed rate) that Safeway received in December 2014 on its 49% interest in Mexico-based food and general merchandise retailer Casa Ley.

Shareholders also will receive contingent value rights entitling them to pro rata proceeds relating to deferred consideration from the sale of the Property Development Centers and any proceeds from the sale of Safeway's 49% interest in Casa Ley.

In April 2014, Safeway stockholders received a distribution of stock in Safeway's former Blackhawk Network Holdings, Inc. subsidiary valued at approximately $4.02 per Safeway share at the time of the distribution.

In addition to no longer being listed for trading on the New York Stock Exchange or any other securities exchange, Safeway will file a Certification on Form 15 with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934 to suspend Safeway's reporting obligations under Sections 13(a) and 15(d) of the Exchange Act.

Goldman, Sachs and Co. served as financial advisor to Safeway in connection with the Company's strategic review and the transactions.

Greenhilland Co. has also served as financial advisor to Safeway. Lathamand Watkins LLP served as Safeway's outside legal counsel, and The Law Offices of Richard C. Weisberg served as outside legal counsel on antitrust matters.

Citigroup, lead financial advisor, Bank of America Merrill Lynch and Credit Suisse served as financial advisors to Albertsons, Cerberus and the investor group.

Schulte Rothand Zabel LLP served as lead outside legal counsel to Albertsons, Cerberus and the investor group, and Dechert LLP, Schulte Rothand Zabel LLP and Baker Botts LLP served as outside legal counsel on antitrust matters.

For more information about Albertsons, sign on to the company's Web site at www.albertsons.com/

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