Pleasanton-based Safeway merging with Albertsons

In a move that could have far-reaching implications for the Tri-Valley, Safeway Inc. and Albertsons announced a merger agreement for the two grocery chains Thursday under which the owner of Albertsons will buy all outstanding Safeway stock in a $9 billion deal.

Pleasanton city officials said they were notified Thursday that Safeway will be purchased by Cerberus Capital. Safeway has had an 18-year presence in Pleasanton since 1996 and has been a major contributor to the city’s employment and municipal tax base.

The company also is one of Pleasanton’s largest employers, with approximately 2,600 employees between the local grocery stores and the headquarters operations. The company has a long history in the East Bay and was previously based in Oakland for many years.

“We understand that part of running a very successful enterprise means making a business decision that’s best for the company,” said Pleasanton City Manager Nelson Fialho. “Given Thursday’s announcement of the sale of Safeway, it is too early to know what that means for Safeway, or for Pleasanton.”

“It is our hope that Safeway, or a new version of the company, will remain an active member of the Pleasanton business community, and continue to be a place of employment for many of our residents.”

The combination of Pleasanton-based Safeway’s 1,335 stores in 20 states with the 1,075 outlets of Boise, Idaho-based Albertsons will create a nationwide network of more than 2,400 grocery stores, the two companies said.

The companies said they expect administrative cost savings, but don’t expect to close any stores.

The Safeway shares will be bought by AB Acquisition, which owns the Albertsons chain and is controlled by Cerberus Capital Management LP.

The merger is expected to be completed by the end of 2014. The agreement also provides for a three-week so-called “go-shop” period in which Safeway can receive and consider alternate proposals, the companies said.

“This merger is one of several actions we have taken in recent months as a result of our strategic business review,” Safeway president and CEO Robert Edwards said.

“Safeway has been focused on better meeting shoppers’ diverse needs through local, relevant assortment, an improved price/value proposition and a great shopping experience that has driven improved sales trends,” he added. “We are excited about continuing this momentum as a combined organization.”

If the merger proceeds as planned, Edwards will become president and CEO of the combined company, while Bob Miller, the current CEO of Albertsons, will become executive chairman.

Julia Cheever, Bay City News, contributed to this story.

Julia Cheever, Bay City News, contributed to this story.

Julia Cheever, Bay City News, contributed to this story.

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