NEW YORK (TheStreet) - Safeway (SWY) said on Wednesday it is in talks concerning a possible sale of the company. The Pleasanton, Calif-based retailer said that it has not reached an agreement on a transaction and "there can be no assurance that these discussions will lead to an agreement or a completed transaction."
Safeway didn't mention who the company's potential buyer is and said it would not comment further on discussions. Separately, the grocery chain said it would distribute its remaining 37.8 million share interest in Blackhawk Network Holdings (HAWK) to shareholders in a tax-free manner. Blackhawk Network Holdings, a prepaid card specialist, is currently over 70%-owned by Safeway.
The disclosure on Wednesday that Safeway could be sold confirms months of speculation that the company was in the process of selling itself. In October, Reuters reported that Safeway had hired Goldman Sachs and was fielding diligence from a handful of private equity firms including Cerberus Capital Management.
Safeway has already been hard at work cutting deals, amid weak profit margins and a stretched balance sheet. In June of 2013, Safeway sold its Canadian operations to Empire Company Limited's Sobey division for $5.7 billion in cash, in a move that allowed the company to pay down $2 billion in debt and buy back $3 billion in stock.
Some investors, however, argued the company could do more.
In September, activist hedge fund Jana Partners took a 6.2% stake in Safeway and argued that the company should consider reviewing strategic alternatives such as a sale of the company. Safeway adopted a poison pill to defend against Jana and launched a multi-billion dollar stock buyback.