By Sarah Skidmore Sell and Candice Choi
The Associated Press
Want more top stories? Sign up here for daily or weekly newsletters with our top news.
Albertsons has one store in Port Angeles.
The acquisition is worth about $7.64 billion in cash, and pending other transactions could top more than $9 billion.
The deal, announced late Thursday, will bring together Safeway and Albertsons. Cerberus last year had bought the Albertsons stores it didn't already own from Supvalu Inc., along with four other Supervalu chains.
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. Kroger Co., a key competitor, recently snapped up regional chain Harris Teeter.
Safeway said in February that it was looking into putting itself up for sale. The Pleasanton, Calif.-based company 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.
Combined, the companies will have more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants.
Safeway and Albertsons say the deal will allow them to better respond to customer needs and lower costs. They also expect to refurbish some stores and expand its product offerings once it is complete.
The deal is expected to close in the final three months of this year. It still needs the approval of Safeway shareholders and federal regulators.
Safeway shareholders will receive $32.50 per share in cash. Pending other actions, the company says the deal is worth roughly $40 per share to stockholders.
Shares of Safeway Inc. closed at $39.47 Thursday. Its shares closed at $34.10 on February 18, the day before Safeway announced it was in talks regarding a potential sale.
The stock fell $1.33, or more than 3 percent, to $38.14 in extended trading after the deal was announced Thursday.
Bob Miller, the current CEO of Albertsons, will become executive chairman of the combined business. Robert Edwards, Safeway's president and CEO, will become president and CEO of the combined company.
The companies said it is too early to determine where it will be based and exactly what its operations will look like following the deal. It does not anticipate any store closings.
Safeway can still actively review other proposals in the coming weeks.