Safeway, Albertsons Merger: Cleanup on Aisle 'Settlement'

By Brett Snider, Esq. on March 11, 2014 | Last updated on March 21, 2019

Safeway, a major grocery store chain that every Californian knows, is being bought up by competitor Albertsons.

Also operating under the name Vons or Pavilions in the Golden State, Safeway is merging with Albertsons in a deal estimated at over $9 million, reports CNNMoney. But the deal won't be finalized until the end of the year, and Safeway has some settlement deals to wrap up first.

Safeway Pays $2.25M in Settlement

Perhaps not coincidentally, on the same day in which the deal was inked to merge Safeway with Albertsons, Safeway paid out $2.25 million to settle misleading advertising suits. According to Courthouse News Service, the settlement will attempt to smoothe over claims that Safeway overcharged customers, misrepresented product weights, and gave the impression that their produce (imported) was locally grown.

Nine California counties were part of the civil action against the grocery chain: Alameda, Fresno, Napa, Sacramento, Solano, Sonoma, Marin, Santa Cruz, and Ventura, and each will split the $2.25 million dollar settlement equally. According to The Marin Independent Journal, this money will go towards each county's district attorney's consumer protection units.

Although Safeway continues to maintain that it "has one of the best price accuracy rates in the nation," the Independent Journal reports, this move was likely a prerequisite to the Albertsons-Safeway merger. Acquisitions and mergers have been on the rise in the last few years, with both Comcast-NBC and American Airlines-US Airways, so Safeway-Albertsons seems ready to join the trend.

Investors File Suit

But not so fast, Safeway and Albertsons aren't out of the woods yet. CNS reports that Safeway investors are suing over the merger offer, which would cash out each Safeway share at $32.50 -- a total of $7.5 billion.

In a press release by Rigrodsky & Long, P.A., the firm announced that it would be investigating potential claims against Safeway's board of directors for breaching their fiduciary duty. In house counsel should pay particular attention to this case, as it seems that the investors are alleging a breach of fiduciary duty from not "shopping" the company around enough.

Perhaps whatever sainted forces convinced the DOJ to drop the American-US Airways antitrust suit could go to work on Safeway's investors.

But barring any deus ex machina in this litigatory play, Safeway may still have some spills to clean up before its merger with Albertsons is complete.

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