The private equity firm, Cerberus Capital Management, which also happens to be the owner of the Albertsons and several other supermarket chains is now going to purchase the Safeway for $9 billion. The country's second largest grocery chain is not facing a good time at all and while it is being sold off under a deal of $9 billion, it is also going to be paying some damages which mount to $2,250,000 and are a result of false advertising. All this is happening in the mid of supermarket consolidation taking place all due to the intense competition being faced by this industry. The growth of big-box retailers, specialty chains, drug stores and even dollar stores in the country have given a tough time to the grocery chains.
The merger is greatly going to benefit the customers. The chain at the moment has stores in 17 different states and now the stores will be expanded into 28 states altogether. The company has given away no information on the existing stores and they havent said whether any of the stores would be closing down. At a Safeway conference, the company stated that "After the two companies combine, our customers will benefit from significant cost-saving synergies and a stronger management team." We are hearing from industry analysts that Safeway is more or less going to follow the strategic position of Trader Joe's and would become a neighbor store.
"If it's a good Cerberus and they want to run a grocery chain, good for them, they purchased a good company. If they are going to have a fire sale and close a bunch of stores, we are not going to allow that to happen," said Mike Henneberry from United Food & Commercial Workers Local 5.