The country's second largest grocery chain is undergoing a sea change. After a lot of speculation Safeway is being sold for more than $9 billion at the same time the store is paying more than $2,250,000 for false advertising.
It comes amid ongoing consolidation in the supermarket industry, which is facing growing competition from big-box retailers, specialty chains, drug stores and even dollar stores.
Albertson's is based in Boise, ID and Safeway is based in Pleasanton. Both say this will transform the supermarket industry. The CEO of Safeway, Robert Edwards, will be the CEO of the new combined chain. Bob Miller, the CEO of Albertson's will be the executive chairman.
Safeway has stores in 17 states and the new chain will be in 28 states. Both say the merger will benefit customers.
On a Safeway conference call, the company said, "After the two companies combine, our customers will benefit from significant cost-saving synergies and a stronger management team."
Industry analysts say Safeway is looking to transform itself into a neighborhood grocer, more like a Trader Joe's with one-of-a-kind items that create brand loyalty. Safeway has not said if any stores will close because of the merger. The head of the local Food Workers union says his members will fight big job losses.
"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.
Safeway is based in Pleasanton and employs about 18,000 workers in the Bay Area. That includes bakers, butchers, deli workers, clerks and baggers.
Safeway also made headlines Thursday afternoon after agreeing to pay more than $2.2 million to settle a consumer protection action. Among other things, they got fined for false adverting, pricing discrepancies, failing to honor coupons, false claims of "locally grown" produce.
One of those filing a claim against Safeway was the Alameda County District Attorney's Office.