Dart Group Outbid by $5 a Share Safeway to Merge With New York Partnership
Safeway Stores Inc., the nation's largest supermarket chain, said it has agreed to a $4 billion merger with a holding company formed by a New York partnership.
The merger agreement provides for SSI Holdings Corp. to pay $69 a share for up to 45 million shares, about 73 percent of Safeway's stock, according to a statement released Sunday by Safeway.
Safeway has been trying to fend off a takeover bid from Dart Group Corp. The Dart Group had offered $64 a share.
SSI Holdings was formed by the partnership Kohlberg Kravis Roberts & Co., which specializes in takeovers.
Safeway, which operates more than 2,300 supermarkets, said the deal was unanimously approved by its board and is subject to the approval of two-thirds of the holders of Safeway's outstanding stock. Safeway said it has about 61 million shares outstanding.
One of the chain's division headquarters is in Oklahoma City. It covers Safeway stores in all of Oklahoma and parts of Texas, Kansas and Arkansas.
Safeway has 22 stores in the Oklahoma City area. This does not include locations in Norman.
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Total workforce in the area is 1,502 employees, including the division's distribution center and headquarters in Oklahoma City.
Safeway also has ice cream, bread and milk plants in Oklahoma City.
These employ from 200 to 250 people in all.
A local official said everything currently is "business as usual."
the Oakland-based chain has been trying to fend off a $64-a-share, or $3.9 billion, bid from the Dart Group, a discount retailer based in Landover, Md., that already owns 4.9 percent of Safeway's stock. Dart's offer is scheduled to expire Aug. 5.
The deal is subject to a minimum of 41.56 million shares being sold under the offer. The tender offer would be followed by a merger of Safeway and an SSI subsidiary, in which Safeway's remaining shareholders would receive $61.60 a share and one warrant to purchase common stock in the holding company.
The Safeway statement said Bankers Trust Co. of New York has agreed to form a syndicate of banks to provide $3 billion in financing for the acquisition.
Safeway stock closed at $61.875 Friday.
Dart Friday accused Safeway of violating federal securities laws by taking "collusive action" with an unknown third party in trying to thwart Dart's bid.
"We are outraged," Dart lawyer Robert Hirsch said Friday, threatening legal action if Safeway's board sold the company to a third party.
There was no answer at Dart's Landover office Sunday. Dart chairman Herbert Haft did not immediately return a message left at his home.
Kohlberg Kravis, which earlier this year bought the Beatrice Cos. for $6.2 billion in a leveraged buyout, received a $15 million fee from Safeway and will get an additional $45 million if the deal is called off under certain, undisclosed circumstances, Safeway said. BIOG: NAME:
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