Safeway Agrees to Be Bought by Albertsons

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March 6 (Bloomberg) -- Safeway agreed to be bought by Cerberus Capital Management’s Albertsons in a deal valued at about $9.2 billion as food retailers struggle with competition from big-box rivals and warehouse clubs. Cristina Alesci has more on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Albertsons.

Tell us the details.

Server leads an investor group that brought albertsons, and now is buying safeway, combining the two supermarket chains to create a massive supermarket company with 2400 stores across the country.

It is a $9 billion deal that amounts to about $40 per share for shareholders.

Most of it will come in cash, some of it funded -- all of it will come in cash, actually, i should say.

Some of the funding will come from previously announced asset sales, about $3.65 per share.

$32.50 will come from directly -- will come from cache directive from cerberus.

In looking at the geographic footprints from both safeway and albertsons, there is some overlap.

We could see some costs being taken out, very significant cost.

In the release, they talk about how maybe reducing costs for customers is a positive outcome of this deal.

No doubt about it, since private equity is involved, there'll probably be a bit of store closings in the work.

-- in the works.

Is there a reason why this is a good combination?

Why does safeway not want to remain independent?

The fact of the matter is that the supermarket business has gotten tougher and tougher with the specialized competitors and the higher-end chains like whole foods pushing into this supermarket business.

At the lower end, you have the walmarts of the world getting involved with selling food.

That has squeezed the supermarkets in the middle and made it tough for them to operate.

The theory is, by combining you get leverage and maybe a better way of operating efficiently and that is really what is going on here.

I want to thank you very

This text has been automatically generated. It may not be 100% accurate.

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