Safeway adopts poison pill after big stock buys

Safeway adopts poison pill after big stock buys
NEW YORK (AP) - Safeway adopted a plan to prevent a hostile takeover after learning of a significant accumulation of its stock by an unnamed investor.

The announcement Tuesday sent shares of the grocer spiking to a five-year high.

So-called "poison pill" plans allow existing shareholders to acquire more stock at a discounted rate to discourage a takeover by an outside entity.

Safeway's defensive plan becomes exercisable if a person or group acquires 10 percent or more of the company's common stock, or 15 percent by an institutional investor.

A representative for the company wasn't immediately available for comment Tuesday.

The grocer, which also operates Vons, noted that it has taken a number of strategic initiatives to increase value for shareholders, including the recent $5.7 billion sale of its Canadian unit. Like other traditional supermarket operators, Safeway is trying to adapt amid growing competition from big-box retailers, drug stores and specialty stores that have been expanding their grocery sections.

Safeway has invested in a loyalty program that offers personalized deals based on a customer's past purchases.

In its fiscal second quarter, sales at company stores open at least a year rose 1.2 percent. By comparison, same-store sales at rival Kroger Co. rose 3.3 percent in its most recent quarter.

Whole Foods, which specializes in organic groceries, posted a 7.5 percent increase in comparable-store sales.

Shares of Safeway Inc., based in Pleasanton, Calif., jumped 7 percent to $30.08.