Safeway shares gained 2% to $39.48 Wednesday on nearly three times normal trading volume after the Wall Street Journal said Cerberus Capital Management was close to a buyout offer worth more than $9 billion, or about $40 a share.
Cerberus, a private equity firm, has been interested in bagging the grocer for several months. Safeway acknowledged buyout interest Feb. 18, saying management was in "discussions concerning a possible transaction involving the sale of the company." At the time, Safeway did not disclose suitors.
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The potential bid comes just days after No. 1 supermarket operator Kroger reportedly expressed interest in snapping up some of Safeway's 1,335 stores. A Cerberus offer could spur a Kroger offer for the entire chain.
Kroger shares climbed 3% to $43.68.
If any Animal House antics are in store over this potential food fight, no one's talking. Kroger, which reports fourth-quarter earnings Thursday, declined comment. Safeway did not return calls or emails Wednesday. Cerberus declined comment.
Any deal would continue the consolidation that's changed the landscape for traditional supermarket operators, who face increasing competition from upscale chains like Whole Foods Market, warehouse club operators such as Costco and retail giant Wal-Mart.
Last March, Cerberus led a investment group that acquired about 900 Albertsons, Acme, Jewel-Osco , Shaw's and Star Market stores from Supervalu. That deal, which included a stake in Supervalu, was worth about $3.3 billion.
Kroger outbid Cerberus and other private equity firms in last October's $2.5 billion buyout of Harris Teeter, which operates over 200 supermarkets.
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