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BOISE, Idaho — Safeway and Albertsons are combining their businesses following Federal Trade Commission approval of their merger late last month.
Safeway and Albertsons are combining their businesses following Federal Trade Commission approval of their merger late last month.
Completion of the merger comes nearly 11 months after a struggling Safeway Inc., the nation’s second-largest supermarket chain, agreed to sell itself to an investment group led by private equity firm Cerberus Capital Management LP, owner of grocery store assets operating under 16 banners, including Albertsons, Vons, Acme and Jewel-Osco.
Cerberus is expected to use the combined heft of Albertsons and Safeway to create savings and enough firepower to battle such competitors as Walmart, which sells the most groceries in the United States. In a business where scale is key, the Safeway-Albertsons combination has increased bargaining power with food manufacturers and the ability to control costs through more efficient supply chains.
The combined company has about 2,200 stores, second only to Kroger Co. With $61 billion in sales, it controls about 5.4% of the U.S. grocery market.
The FTC regulators OK’d the merger after the companies agreed in December to sell 168 stores to four FTC-approved buyers — Haggen Inc. of Bellingham, Wash.; Associated Wholesale Grocers Inc. of Kansas City, Kan.; Associated Food Stores Inc. of Salt Lake City; and Supervalu Inc. of Eden Prairie, Minn.
The FTC said that without the store sales, the merger would have reduced competition in 130 local markets where the two chains compete. Those markets are in Arizona, California, Montana, Nevada, Oregon, Texas, Washington and Wyoming.
The addition of some 1,300 Safeway stores in 20 states should give the Cerberus-led group control of a company roughly the size of Kroger’s grocery assets. Kroger has 2,631 stores in 34 states, although not all sell groceries. Among Kroger’s outlets are multi-department stores, convenience stores and jewelry stores.
Bob Miller, Albertsons’ chief executive officer, is to become executive chairman of Cerberus’ grocery operations. Robert Edwards, Safeway’s chief executive, is retaining his CEO title with the combined grocery store business.
