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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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2 Comments

  2. I hope it means they will finally get some baggers at the Bernal store. I finally stopped going there, because they seem to only have 1-2 baggers & one is always AWOL.

  6. Hope this ownership change can bring about service improvements in their delivery business. Recently it took them 3 tries to deliver an order for an elderly shut in client: one no show with no call. One partial delivery–forgot the cold/frozen and it was also after the delivery window–again no call. 3rd try they finally meet the commitment. Poor follow up and lack accountability plagues this organization.

  7. The Pleasanton City Council caved to Pleasanton Safeway Corporate in the build out of the Bernal Gateway property as part of their good community citizenship. This prevented Whole Foods from any possible development on that property. We were promised a “Whole Foods type” market and instead ended up with an average same old Safeway and an unneeded gas station. Dublin won the Whole Foods market. And now we don’t even retain the Safeway Corporate headquarters in Pleasanton. Shame on everyone involved in this monopoly.

  8. My wife and I switched to Trader Joes a few years ago and never looked back. They may not have the vast selection of Safeway but the store is much smaller so we spend a lot less time walking long distances inside to get what we want. And the folks there are all very friendly.
    Now if they could just do something about their parking lot!

  9. Let us realize that investment bankers bought Safeway.

    Safeway got sold because the former owners could not get as much profit out of it as the shareholders were promised by the investment bankers, Cerberus (name refers to the dogs that are the hounds of hell. Look up the Goog images for “cerberus”: does that give you confidence that more baggers, service for housebound elderly, and a better store are what is ahead?

    Take a quick look at the investment banker’s way to make piles of money for shareholders: it is described in the recent experience of Mervyn’s, Bain (Romney’s company, and he was very good at this) — it’s a pretty straightforward procedure.

    — Buy a company, make it look more profitable in a big hurry and for the short run by cutting costs (layoffs), selling off assets (the significant properties Safeway owns), reducing services, and other “economies.”

    — That makes all the ratios banks use to give loans much more favorable, even though the new financial plan is not sustainable very long.

    — But with the new ratios, a huge refi gets made, saddling Safeway with a ton of debt and yielding obscenely big “fees” (paid out of the capital that is lent) for Cerberus and the shareholders.

    — Adding this load of debt to an already crippled business, Safeway declares bankrupcty in time, so Cerberus sells it at fire-sale prices, once again yielding profits for themselves.

    Did you expect the hounds of hell to care about Pleasanton’s grocery needs? They are interested in profits, indeed they have a fiduciary legal responsibility to make the most profitable arrangements for their shareholders. The rest of us will just have to get over it — get over the loss of a grocery store, loss of jobs, disruption as the properties are sold and everything settles into something else (remember the Mervyn’s building sitting empty for several years?).

    Lots of pain, lots of profit for the ones causing the pain. Geez, do you think Cerberus could at least have changed its name to “Grocers United” or something? No. They are so confident about their strategy that they don’t feel they must even hide their identity and goals. In the olden days, the wolf at least put on sheep’s clothing, but I guess they don’t think we will notice until it’s too late. Which it already is.

    This is not a new story. It is well documented if only you spend an hour on the web.

  11. Guys. The Pleasanton HQ will stay as the “West” division of the company and the Northern California division. Corporate layoffs will happen in Southern California and Southwest, where both Albertsons and Safeway operate stores. So much Fear, Uncertainty, and Doubt going around…

  12. To elaborate, before you start pointing at Mervyns, remember what happened with Albertsons:

    1. Over-expansion causes Albertsons Inc. to sell itself in 2006, suitors being CVS/pharmacy (taking the stand-alone Osco/Sav-on drug stores), SuperValu, and investor groups, with SuperValu taking the good divisions (“New Albertsons Inc.”, basically acting as a shell company) and the investor groups (under a company known as AB Acquisition LLC) and the new company composing the divisions, Albertsons LLC.

    2. Albertsons LLC starts to close or sell stores. The Northern California division was sold in 2007. If Cerberus wanted to mulch what they had, this would be the time. While they did do a tremendous amount of store closures (the Florida division closed, with the four stores left going back to the Dallas-Fort Worth division), they made the rest of the chain profitable.

    3. SuperValu was having a hard time during this time as well, with closures happening across all divisions. The reputations of their stores deteriorated. Jewel-Osco and Acme fell from grace. In 2013, New Albertsons was sold back to Albertsons.

    4. And finally, we get to Safeway. Safeway’s been an incredibly poor steward to the chains it bought, as anyone can say. Because Safeway made the decision to do all the ordering from California, its acquired chains suffered. Genuardi’s closed all but one store. Dominick’s completely alienated its large customer base and folded. Randalls was similarly decimated and was rumored to pull out.

    The good news is that Safeway will continue. The name is strong in California (and I believe it will take over the Albertsons name in the Pacific states), the Pleasanton headquarters WILL remain (after all, there’s no Northern California division of Albertsons anymore), and it will be part of a new national chain, something it hasn’t been able to call itself for a while.

  13. I do love that people that “don’t shop at Safeway and never will” post on here. So something you know absolutely nothing about and don’t care to know about, you want to comment on. Gee thanks American for the idiots that rule our lives.

  14. To A Johnson: So you are predicting that products/services at Pleasanton’s Safeways will improve, there will be no layoffs or restructurings that improve financial cosmetics but are not sustainable, and the proceeds from the big sell-off of Safeway-owned property will NOT go right into the pockets of Cerberus?

    If yes, then can you explain what was in it for Cerberus — investment bankers, after all — to go more fully into the low-profit-margin grocery business?

    To put the positive spin on this acquisition: this is said to be the way investment bankers do us peons the favor of dismantling outdated companies who can no longer deliver good returns to shareholders, The upside being that something new and wonderful will take its place (at present, that seems to be the combo of low-cost groceries [CostCo] and high-cost groceries [Gene’s, Whole Foods]).

    But meanwhile, the grocery business itself is not the greatest concern of the buyers and sellers.

  15. Many friends of our are being laid off at Pleasanton Corp offices. The Layoffs are MASSIVE and buildings are mostly empty and will be up for sale.

    They’re only keeping a regional office / department which is a small fraction of what the labor force was prior to the Cerberus Acquisition.

    I love Safeway but don’t care for Luckys, Albertsons and their subsidiaries. This acquisition is truly sad.

    More changes to come, they always do and will eventually trickle down to store level.

    Glad we have Costco, Trader Joes and Wholefoods!

  16. Our closest store is a rather deas Albertsons. Luckily here we have some very inexpensive and bustling ethnic markets. I am not sure the chains are paying attention, but many of us shop at the middle eastern and Asian markets these days where we pay a lot less for our groceries.

  17. The layoffs began last year. Safeway wasn’t at all forthcoming with employees before it was turned over and I do feel bad for the many who were strung along.
    The (negative) changes within the stores themselves have also been quite notable. An unfortunate change all around but Steve Burd dug their grave before bailing and left them with the mess. Sad.

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