Shareholder lawsuit questions Safeway-Albertsons merger
Shareholder lawsuit questions Safeway-Albertsons merger
On behalf of Safeway Inc. shareholders, a class action lawsuit has been filed against Safeway, its board of directors, Albertson's LLC, Saturn Acquisition Merger Sub Inc. and Cerberus Capital Management L.P. In March, Safeway and Albertsons announced a $9 billion merger agreement that was unanimously approved by Safeway's board of directors. According to a statement from shareholder rights attorneys at Robbins Arroyo LLP, which will represent the Safeway shareholders, "Omitted and/or misrepresented information is believed to be material to Safeway shareholders' ability to make an informed decision whether to approve the proposed transaction."
The complaint arises out of a March 6 press release announcing that Safeway had entered into the definitive merger agreement with Albertson's, pursuant to which Safeway shareholders would receive, for each Safeway share they own, $32.50 in cash and the right to receive pro-rata distributions of net proceeds from primarily non-core assets, estimated to be worth $3.65 per share. The complaint seeks injunctive relief on behalf of shareholders of Safeway plaintiff and all other similarly situated shareholders of Safeway as of March 6.
According to the Robbins Arroyo satement, Safeway shareholders allege that certain of the defendants, in connection with the proposed transaction, breached or aided and abetted the other defendants' breaches of their duties and obligations owed to Safeway shareholders. The complaint further alleges that, in an attempt to secure shareholder approval of the proposed transaction, the defendants filed a materially false and misleading preliminary proxy statement on Schedule 14A with the U.S. SEC in violation of the Exchange Act and their duties of candor and full disclosure.
The lawsuit claims there were violations of sections of the U.S. Securities & Exchange Act of 1934 related to shareholder approval of executive compensation and liability to contemporaneous traders for insider trading, as well as a U.S. Securities & Exchange Commission rule about false or misleading statements.
The proposed merger would join more than 2,400 stores, something the national consumer group Food & Water Watch has taken issue with. The group estimated that increased retail grocery concentration in the markets where the two chains currently compete could increase consumer grocery prices between $900 million and $2 billion every year. The group also suggested that the merger could harm farmers that are selling into Safeway’s 'locally grown' program.
