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Divestitures possible in Safeway-Albertsons deal: Edwards

Divestitures possible in Safeway-Albertsons deal: Edwards

Although Safeway and Albertsons said no store closures were planned as a result of the pending merger of the two companies, it is possible that some stores could be divested to meet Federal Trade Commission antitrust requirements.

“The FTC review may result in required divestitures — they 're not really classified as closures,” explained Robert Edwards, president and CEO of Safeway, in a conference call with analysts discussing the merger.

As reported Thursday, Safeway agreed to an offer valued at about $9 billion from AB Acquisition, the parent company of Albertsons. It is scheduled to close in the fourth quarter.

Read more: Safeway, Albertsons agree to merge

The two companies’ footprints overlap in several markets, particularly along the West Coast. Together they will operate about 2,400 stores from New England to Alaska.

Edwards, who will be CEO of the combined company, also said the two companies had begun looking at opportunities for cost-saving synergies.

“It's a significant benefit and part of the rational for doing the merger. There clearly are significant synergies that will accrue to the combined company,” he said, but declined to provide specific financial ramifications.

In addition to product-purchasing synergies, another example he cited was the potential for wider distribution of private labels.

Asked about the future of loyalty programs — Safeway has recently rolled out its digital Just For U loyalty program, while Albertsons has been eliminating loyalty programs at its banners — Edwards said that was an area that would be studied.

“One of the rationales for the combination of the two companies is that we combine the best of both companies going forward,” he said, noting that Safeway’s “use of data is very key to our loyalty programs and the success we've had there.”

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