Pleasanton, Home of Safeway, Bracing for Supermarket Chain’s Sale

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    NEWSLETTERS

    NBC Bay Area
    The exterior of a Safeway supermarket is seen in this file image.

    The City of Pleasanton is bracing for the fallout from this week’s sale of the Safeway supermarket chain to a private equity company.

    Right now, Safeway is Pleasanton's second largest employer. In Pleasanton alone, there are close to 2,600 people working at Safeway grocery stores and the company's headquarters.

    Safeway Reaches Preliminary Sale Deal

    [BAY] Safeway Reaches Preliminary Sale Deal
    Safeway has agreed to be acquired by an investment group led by Cerberus Capital Management, the owner several supermarket chains. Cheryl Hurd reports. (Published Thursday, Mar 6, 2014)

    Friday, Pleasanton Mayor Jerry Thorne said he was surprised by Thursday’s announcement and is now in the process of setting up meetings with Safeway and New York-based private equity firm Cerberus Capital Management to see what can be done to soften the blow to the local economy.

    So what would the merger mean to everyone involved? For the employees, who will be negotiating a new contract later this year, jobs could be on the line.

    For shoppers, the sale could mean lower prices, as executives pledge to pass cost savings on to the consumer.

    Analysts and customers, however, are not so confident.

    “They will probably close some stores,” San Francisco State University College of Business Professor Mitchell Marks said. “They are spending $8 billion on this acquisition, so they are going to have to get some of that back right away.”

    “Definitely the prices are going to go up, I’m sure of that,” said John Manley, a shopper from Millbrae.” On most mergers, that’s usually the case.”

    The merger is not a done deal. Safeway has a few days to try to find a better offer.

    There are also anti-trust proceedings that need to take place.

    Safeway has been trying to adapt for some time to increased competition and recently shed some of its smaller, less profitable units, such as its Canadian operations and Dominick's stores in Chicago.

    The company has more than 1,300 U.S. locations under banners including Safeway, Vons, Pavilion's, Randall's, Tom Thumb and Carrs.

    AB Acquisition LLC, which operates Albertsons, along with Acme, Jewel-Osco, Lucky, Shaw's and other stores, is owned by Cerberus and other investors. It operates more than 1,000 stores. Albertsons is based in Boise, Idaho.