Safeway — Merger or Acquisition (March 2014)
27 slides from Safeway's merger presentation, Mar 7, 2014
Slide 1: Town Hall with Robert Edwards
Town Hall with Robert Edwards Safeway and Albertsons Merger | March 7, 2014
Slide 2: Announces Definitive Merger Agreement with Albertsons
Announces Definitive Merger Agreement with Albertsons Safeway Provides Estimated $40 in Total Value to Safeway Shareholders
Slide 3: Joe Albertson
Joe Albertson In 1939 Joe Albertson left his position as a district manager for Safeway Stores and--with partners L.S. Skaggs, whose family helped build Safeway, and Tom Cuthbert, Skaggs’s accountant--opened his first one-stop shopping market, called Albertson’s Food Center, on a Boise, Idaho corner
Slide 4: Merger Announcement
Merger Announcement Safeway and Albertsons will combine via acquisition of Safeway shares (NYSE:SWY) by AB Acquisition LLC AB Acquisition owns Albertsons, and also operates other banners such as ACME, Jewel-Osco, Shaw’s and Star Market Cerberus-led investor group owns AB Acquisition Current Albertso
Slide 5: Bob Miller, CEO, AB Acquisition LLC
Bob Miller, CEO, AB Acquisition LLC Bob Miller has spent more than 50 years in retailing Impressive record of improving the financial and operating performance of public and private corporations 30 years working his way up the ranks at Albertsons from Store Manager to EVP Retail Operations Additiona
Slide 6: Company Snapshot
Company Snapshot (As of 12/31/2013) Stores 1,335 1,075 Albertsons, ACME, Jewel-Osco, Lucky, Safeway, Vons, Pavilions, Banners Shaw’s, Star Market, Super Saver, United Carrs, Randalls, Tom Thumb Supermarkets, Market Street, Amigos AK, AZ, CA, CO, DE, HI, ID, IL, MD, MT, AZ, AR, CA, CO, DE, FL, ID, IL
Slide 7: Safeway
Safeway Carrs/ Safeway Northwest (incl. Carrs) 314 Northern Eastern California Denver 125 266 133 Southern Phoenix California/ 115 Vons Randalls 274 Tom Thumb 108 Casa Ley Stores 1,335 Distribution Facilities 13 Manufacturing Plants 20
Slide 8: Albertsons
Albertsons Combined organization comprised of 1,075 stores and 14 DC’s February Division 2014 DC’s SoCal 181 2 Intermountain 95 2 Northwest 104 1 Southern 86 1 Southwest 113 2 United 51 2 Total ABS LLC 630 10 Jewel 180 1 Shaw’s 155 2 ACME 110 1 Total NAI 445 4 Total 1075 14 60 Northwest 3 30 1 Portl
Slide 9: There is a clear and compelling rationale for this merger
There is a clear and compelling rationale for this merger The combined retail assets, distribution centers, and manufacturing plants will allow for: _ A broader assortment of products _ A more efficient distribution and supply chain _ Enhanced fresh and perishable offerings _ Expanded access to Safe
Slide 10: There is a clear and compelling rationale for this merger
There is a clear and compelling rationale for this merger Appeal to a more diverse and evolving customer landscape with a wider geographical reach: _ 2,400 stores in 34 states and the District of Columbia _ 27 distribution centers and 20 manufacturing plants _ Over 250,000 employees _ Under 16 diffe
Slide 11: There is a clear and compelling rationale for this merger
There is a clear and compelling rationale for this merger The combined company is better positioned for long-term growth to serve our communities We expect to adapt more quickly to evolving shopping preferences in diverse regions across the U.S. Working together will create cost savings that will tr
Slide 12: Premium Paid to Safeway Shareholders
Premium Paid to Safeway Shareholders Estimated total value of $40 per share for the combined transactions Significant premium over SWY’s closing share prices: _ +17% over $34.10 on February 18, 2014, the day prior to announcement of sale discussions _ +56% over $25.62 six months ago, on September 6,
Slide 13: Value to Safeway Shareholders
Value to Safeway Shareholders $32.50 Cash consideration for merger $3.65 Mid-point of estimated net after-tax proceeds from sales of primarily non-core assets, Property Development Centers and Casa Ley, either paid in cash by closing or through Contingent Value Rights post-closing $3.95 Estimated va
Slide 14: Value from Sales of PDC and Casa Ley
Value from Sales of PDC and Casa Ley After-tax sales proceeds estimated at $3.65 per SWY share If Property Development Centers (PDC) and/or Casa Ley are sold before closing the merger, then shareholders will receive a cash dividend (net of corporate taxes and sale expenses) If PDC and/or Casa Ley ar
Slide 15: Property Development Centers (PDC)
Property Development Centers (PDC) Focused on developing retail shopping centers with Safeway as the anchor store Investments are concentrated in Safeway’s core urban / suburban markets Proven track record with strong competitive advantages; 25 current properties Provided pre-tax income of $44M and
Slide 16: Casa Ley food and general merchandise stores
Casa Ley 200 food and general merchandise stores in western Mexico Private; family-owned and operated Safeway’s 49% minority investment made in 1981 Portion of earnings in Other Income; $17.6M in 2013 and $63M over last four years Dividends paid periodically; $4M for 2013 and $16M over last four yea
Slide 17: Value From Distribution of Blackhawk Shares
Value From Distribution of Blackhawk Shares Independent of Acquisition Announced plan on February 19th to distribute 37.8M shares pro rata to SWY stockholders* Distribution expected to be completed in mid-April; SWY shares to trade ex-HAWK after distribution Current value estimated at $3.95 per SWY
Slide 18: Closing Conditions
Closing Conditions The Safeway Board unanimously approved this transaction Closing of the merger is expected in Q4 2014 Stockholder approval required; expected in Q3 2014 Regulatory approvals required Go-shop period of 21 days; additional 15-day negotiation period allowed if bona fide offer received
Slide 19: The important thing is to be sure that the important thing remains the important thing
The important thing is to be sure that the important thing remains the important thing.
Slide 20: Our Business Strategy
Our Business Strategy Core grocery business growth Improved Differentiated Best in Class Price/Value Product Quality Experience Proposition & Assortment & Service
Slide 21: Key 2014 Initiatives
Key 2014 Initiatives Continue focus and momentum to deliver 2014 objectives: _ Price / Value improved using Strategic Vendor Management funds _ Consumer centric approach down to the store level built on unique needs of our shoppers Premium, Mainstream, Value clusters Center of Store Remodels Localiz
Slide 22: Moving Forward
Moving Forward Focus on fulfilling current job requirements to the best of your abilities We will continue to compete against Albertsons and its banners Additional information on major developments will be shared when it becomes available An employee merger website will be available next week
Slide 23: Summary
Summary Merger provides attractive value for Safeway shareholders Combined transactions deliver a significant premium to Safeway shareholders Merger allows to compete more effectively and efficiently in dynamic food retail environment Merger benefits customers through synergies and stronger manageme
Slide 24: It's not what you look at that matters, it's what you see
‘It’s not what you look at that matters, it’s what you see.” - Henry David Thoreau
Slide 25: SAFEWAY
SAFEWAY @ 2s
Slide 26: Additional Information About the Acquisition and Where to Find it
Additional Information About the Acquisition and Where to Find it This communication does not constitute a solicitation of materials of any vote or approval in respect of the proposed merger transaction involving Safeway or otherwise. In connection with the proposed merger, a special stockholder mee
Slide 27: Townhall Pt1 (transcript)
SAFEWAY Townhall Pt1 [Robert Edwards – President & CEO, Safeway Inc. ] Welcome, it’s good to be with you. So a couple of things have happened since we were last together and we’ll talk about those and we’ll take all the time we need for questions and I hope we’ll answer as many questions as we can.