USD 9 Billion Dollar Deal for Cebercus Capital Management

A party that was led by the private equity firm Ceberus Capital Management, has agreed to acquire Safeway. This deal is worth over 9 billion US Dollars. The deal also gives Ceberus control over the big grocery store chain in the largest leveraged buyout of the year.
Cerberus is planning to merge Safeway together with Albertsons, which is a smaller grocery store company that it owns. Shareholders are expected to receive about 40 US Dollars per share, made up primarily of a cash payout of 32.50 US Dollars a share and a portion of proceeds from asset sales.
The bid represents a 17 % premium over the Safeway’s stock charge over the day before this disclosed that this was within sales talks along with an unidentified bidder that the turned out to become none other than the Ceberus Capital Partners.
The deal marks the biggest since the financial crisis, as buyout firms continue to seize on the prevalence of cheap debt financing to make acquisitions. The sale will be supported with roughly 7.6 billion US Dollars, worth of money that is borrowed.
Cerberus, which emerged as the top suitor for Safeway in the last few months, hopes to reap more cost savings by combining the retailer with its other stores. Those holdings together, and Safeway will have over 2,400 stores and more than 250,000 workers.
Bob Miller, chief executive of the Albertsons said within his statement that “Working organized would enable us to generate cost savings that transform into worth reductions for our clienteles. Together, we’ll be able to reply to local requirements more quickly and deliver outstanding products at the lowest possible price, more efficiently than ever before.”
Robert Edwards is the president as well as chief executive of the Safeway, cited these charge savings to reason that the contract would pass regulatory muster. Moreover, he said onto a conference call together with reporters that this reasonable position for the mutual company” would permit it to decrease prices.
A long time ago, Safeway had a period of ownership in private equity, after it was bought in 1986, for 4.25 billion US Dollars. The sale was a big success, which reaped billions of dollars of profit, unfortunately, a lot of people lost their jobs.
Mr. Miller said that, “There are no store closures planned at this time based on this merger.” Under the terms of the deal, he will become the executive chairman of the new company. Safeway’s chief executive will stay in this position for the joint grocery store businesses.
The sale is expected to close in the 4th quarter, pending approval by the Safeway investors and regulators. If the deal should fall through, under any circumstances, Cerberus would have to pay Safeway a 400 million US Dollars breakup fee.