Safeway Inc. and Albertsons announced a definitive agreement under which AB Acquisition LLC, the owner of Albertsons, will acquire all outstanding shares of Safeway for $40 a share, totaling $9 billion.

The merger agreement was unanimously approved by the board of directors of Safeway. It will create a diversified network that includes over 2,400 stores, 27 distribution facilities and 20 manufacturing plants with over 250,000 dedicated and loyal employees. No store closures are expected as a result of this transaction.

Bob Miller, Albertsons current chief executive officer, will become executive chairman. Robert Edwards, Safeway’s current president and CEO, will become president and CEO of the combined company.

“This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country," Miller said in a press release. "It also brings together two great organizations with talented management teams. Robert Edwards and his team have done an outstanding job in positioning Safeway’s core business for success, by investing in its stores and creating innovative strategic marketing programs that contribute to shareholder value. Working together will enable us to create cost savings that translate into price reductions for our customers. Together, we will be able to respond to local needs more quickly and deliver outstanding products at the lowest possible price, more efficiently than ever before.”

“This merger is one of several actions we have taken in recent months as a result of our strategic business review," Edwards said in the release. "The combined value of the transactions described above is expected to deliver a premium to Safeway’s shareholders of 72 percent from one year ago, and 56 percent over the share price six months ago. Safeway has been focused on better meeting shoppers’ diverse needs through local, relevant assortment, an improved price/value proposition and a great shopping experience that has driven improved sales trends. We are excited about continuing this momentum as a combined organization. We look forward to working with Bob Miller and the rest of the Albertsons team as we proceed together on a path towards becoming an even stronger organization.”

Banners will include Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, Super Saver, United Supermarkets, Market Street and Amigos.

The merger agreement includes a “go-shop” period, during which Safeway, with the assistance of Goldman Sachs, its financial advisor, will actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals.  The initial go-shop period is 21 days.  For a 15-day period following the termination of the go-shop period, Safeway will be permitted to continue discussions and enter into or recommend a transaction with any person that submitted a qualifying proposal during the 21-day period.  A successful competing bidder who makes a superior proposal during the go-shop period would bear a $150 million termination fee.  For a competing bidder who did not qualify during the go-shop period, the termination fee would be $250 million.