Safeway Completes Sale of Property Development Center Assets to Terramar Retail Centers

PLEASANTON, CA--(Marketwired - Dec 23, 2014) - Safeway Inc. (NYSE: SWY) today announced that it has completed the sale of the shopping center and real estate development assets owned by its wholly-owned subsidiary, Property Development Centers, LLC ("PDC"), to Terramar Retail Centers, LLC ("Terramar"). Terramar has acquired the PDC assets, and has assumed certain liabilities, for a purchase price of approximately $830 million, subject to adjustment for customary prorations, an escrow holdback and other adjustments. The estimated total cash payment to Safeway stockholders for PDC is $2.45 per share, of which $2.38 is estimated to be paid at the closing of the pending merger between Safeway and Albertsons (the "Merger").

Safeway stockholders will also receive a contingent value right ("CVR") at the closing of the Merger relating to any additional net cash proceeds from the sale of PDC, including any amounts released from escrow, any additional payments from Terramar and any holdback amounts not spent for potential contingent liabilities. Safeway currently estimates these amounts to total approximately $29 million, or approximately $18 million net of tax, which, if paid, would represent approximately $0.07 per share. Safeway currently estimates that any amounts paid with respect to this additional distribution would be made within approximately one year. Actual payments in respect of the PDC CVR could vary from this amount and there can be no assurance as to the timing or amount of any payments. 

Safeway undertook the sale of PDC in connection with the Merger, which was announced on March 6, 2014, and is expected to close in January 2015. Safeway currently estimates that, in addition to the $32.50 cash per share to be paid at the closing of the Merger, stockholders will receive, as additional merger consideration, a cash payment of $2.38 per share from the initial net proceeds of the PDC sale, as well as the PDC CVR and a second CVR relating to Safeway's 49% interest in Mexico-based food and general merchandise retailer Casa Ley, S.A. de C.V. Both CVRs will be non-transferable and non-tradable. Safeway intends to include the fair market value of the CVRs at the time of the Merger in the Merger consideration for tax reporting purposes. In addition, on April 15, 2014, Safeway stockholders received a distribution of stock in Safeway's former Blackhawk Network Holdings (NASDAQ: HAWKB) subsidiary valued at $4.02 per Safeway share at the time of the distribution.