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The Federal Trade Commission (FTC) announced yesterday that it has approved the proposed $9.2 billion acquisition of Safeway by Cerberus Capital Management-owned Safeway, with an agreement by the companies that they will sell 168 stores to alleviate concerns that the deal would have created an anticompetitive climate in certain markets.

According to the FTC decree, "Under the proposed settlement, Haggen Holdings, LLC will acquire 146 Albertsons and Safeway stores located in Arizona, California, Nevada, Oregon, and Washington; Supervalu Inc. will acquire two Albertsons stores in Washington; Associated Wholesale Grocers, Inc. will acquire 12 Albertsons and Safeway stores in Texas; and Associated Food Stores Inc. will acquire eight Albertsons and Safeway stores in Montana and Wyoming.

"It is expected that Associated Wholesale Grocers, Inc. will assign its operating rights in the 12 Texas stores it is acquiring to RLS Supermarkets, LLC (doing business as Minyard Food Stores) and that Associated Food Stores Inc. will assign its rights in the eight Montana and Wyoming stores it is acquiring to Missoula Fresh Market LLC, Ridley’s Family Markets, Inc., and Stokes Inc.

"Also under the proposed settlement, the divestitures to Haggen must be completed within 150 days of the date of the merger; the divestitures to Supervalu Inc. must be completed within 100 days of the date of the merger; and the divestitures to Associated Food Stores Inc. and Associated Wholesale Grocers, Inc. must be completed within 60 days of the date of the merger."

The Wall Street Journal reports that both companies expect the deal to now be closed within five business days.
KC's View:
Spend time with high-level, high-powered food industry executives and experts - as I have the last few days at the FMI Midwinter Executive Conference - and you discover that there is a vast difference of opinion about this deal. Some think it will work, though there is fairly consistent expectation that Haggen probably will sell off a few stores down the road as it looks to make the chain more efficient and maybe make back some cash. And some think it will be an utter disaster, and that more than a few of the stores that have been in play will end up being sold off.

To be honest, I have no idea. Because many of the people espousing either point of view are people I like and respect, people who are a lot smarter than I. I'm probably more skeptical about the long term prospects than not, but hell, I tend to be more skeptical than not about most things.