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Safeway Inc. took measures to prevent a hostile takeover after it became “aware of an accumulation of a significant amount of [its] common stock.”
The grocer has adopted a one-year stockholder rights plan that its board believes will help promote the fair and equal treatment of all Safeway stockholders and ensure that it remains in the best position to discharge its fiduciary duties.
According to published reports, the investor was New York-based Jana Partners, LLC, which disclosed an activist stake of 6.2 percent in a company filing, stating that the grocer was undervalued and that it was discussing strategic alternatives including replacing management.
Safeway has recently agreed to sell its Canadian operations to Sobey’s Inc. and conducted an IPO of Blackhawk Network. Its board believes the rights plan will help ensure it can continue to implement its strategic plan and maximize long-term value for all shareholders.
The plan allows existing shareholders to acquire more stock at a discounted rate to discourage a takeover from an outside company. The plan becomes exerciseable if a person or group acquires 10 percent or more of the company’s common stock or an institutional investor acquires 15 percent.
Pleasanton, Calif.-based Safeway operates 1,412 stores in the United States and 223 stores in western Canada and had annual sales of $44.2 billion in 2012. On June 12, 2013, Safeway announced the planned sale of substantially all of the net assets of its Canadian division.