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Safeway adopts poison pill to prevent takeover

By Associated Press

LAST UPDATED: 08:39 a.m. HST, Sep 17, 2013

NEW YORK » Safeway adopted a plan to prevent a hostile takeover after learning of a significant accumulation of its stock by an unknown investor.

The announcement today sent shares of the grocer spiking 8 percent to a five-year high.

So-called "poison pill" plans allow existing shareholders to acquire more stock at a discounted rate to discourage a takeover by an outside entity.

Safeway's defensive plan becomes exercisable if a person or group acquires 10 percent or more of the company's common stock, or 15 percent by an institutional investor.

The company has been unable to confirm who the investor is and spokesman Brian Dowling said that Safeway couldn't be more specific about the size of the stake that the investor had accrued.

The grocer, which also operates Vons, did point out the strategic initiatives it has undertaken to increase value for shareholders, including the recent $5.7 billion sale of its Canadian unit and the initial public offering of Blackhawk Network, its gift and prepaid card unit.

Like other traditional supermarkets, Safeway is also trying to adapt amid growing competition from big-box retailers, drug stores and specialty stores that have been expanding their grocery sections.

A centerpiece of Safeway's push to hold onto customers has been a loyalty program that offers personalized deals based on a shopper's past purchases.

But in its most recent quarter, sales at company stores open at least a year rose 1.2 percent. By comparison, same-store sales at rival Kroger Co. rose 3.3 percent.

Whole Foods, which specializes in organic groceries, posted a 7.5 percent increase in comparable-store sales.

Shares of Safeway Inc., based in Pleasanton, Calif., jumped $2.31 to $30.35.

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serious wrote:
It is only a matter of time. The Safeways of the world cannot compete with the buying power of the big box stores--period!!!
on September 17,2013 | 08:49AM
cojef wrote:
Unless you you the same game. Even then, it is difficult as the business model is slightly different. Big-box store merchandise on price alone, whereas, regular merchant carry their brand or branded merchandise, plus some higher quality/priced products. Also, big-box stores may not repeated carry the same brand products as purchasing is based on price alone, so there is no brand loyalty selection option for the customers.
on September 17,2013 | 09:22AM
NITRO08 wrote:
Big box stores don't carry everything you need.
on September 17,2013 | 12:40PM
primowarrior wrote:
Safeway seems pretty expensive, except for it's sale items. Walmart seems to carry some comparable items at a lower price. Pays to shop around.
on September 17,2013 | 09:41AM
CriticalReader wrote:
Safeway's customer service is also a big problem. It's so corporate, no one is accountable.
on September 17,2013 | 11:49AM
nodaddynotthebelt wrote:
This does not bother me as this store's prices are ridiculous. Also, their deli section is a scam. They price their deli according to weight. But they do not have a scale to weigh the food. You take the food to the cash register and then find out how ridiculous high the price is. At this point you are placed in an embarrassing situation where you either decline the food after you have put together a container of food which you think is the weight you wanted and find out is double the weight. Or you can just pay for the item and not come back next time, which is what I did. I could have purchased a much better meal at a much better price elsewhere. I thought I was saving money by going here for a lunch on the run and found myself getting ripped off. There should be a law against this kind of tactic.
on September 17,2013 | 09:50AM
tiki886 wrote:
Safeway must be doing something great since someone is trying hard to buy them. Their stock jumped $2.31 to $30.35.
on September 17,2013 | 05:46PM
Rickyboy wrote:
Many choices choose wisely.
on September 17,2013 | 06:39PM
islandsun wrote:
Safeway is getting better. Hopefully they can fix the customer service and inventory problems.
on September 17,2013 | 09:07PM
mikethenovice wrote:
Costco should buy Safeway.
on September 17,2013 | 09:24PM
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