1. Market Data
February 20, 2014

US grocer Safeway weighs sale to private investor

American grocery retailer Safeway is in negotiations with private investor Cerberus Capital Management over a possible sale of the company.

By Rohit

American grocery retailer Safeway is in negotiations with private investor Cerberus Capital Management over a possible sale of the company.

A deal is expected to be finalized within next few weeks, reported Reuters citing sources familiar with the matter.

Over the past several months, the parties have been in discussions over the proposed deal and the retailer is not in discussions with other buyers, the sources added.

According to industry experts, a deal, if reached, would create a leading grocery franchise on the West Coast, combining Safeway with Cerberus’ Albertsons chain.

This would provide Cerberus with access to Safeway’s back office operations, technology and manufacturing plants as well as lower costs.

According to Reuters, the parties would require divestures in the Southern California region as they own substantial assets in the region.

Earlier this week, Safeway said that it has not reached a deal on a transaction, and there can be no guarantee that these talks will lead to an agreement or a completed transaction.

The retailer is set to sell its remaining 37.8 million shares (approximately 72.2%) in Blackhawk Network Holdings to its stockholders.

In addition, Safeway intends to monetize investment in Casa Ley, a Mexican food and general merchandise retailer.

However, it noted that there can be no assurance as to whether the company will be able to divest its 49% holding in Casa Ley on acceptable price and terms.

For the fourth quarter of 2013, the retailer reported $3.31bn in net earnings, while net sales totalled $11.31bn.