Living the Safe Way

I wrote up the merger chain for Safeway.

The chain was started in 1914 by a grocer named Sam Seelig. Like others in the business he bought food from distributors on credit and sold to customers on credit. He expanded his empire to 270 stores on credit.

Everything looked great. Easy credit was a paradigm shift that would make infinite wealth possible!

By 1925, Selig could not make ends meet and his prime creditor WHR Weldon took over the stores.

Weldon saw large numbers of people getting in trouble with credit.

Weldon saw credit as a dangerous way to shop. So the stores stopped taking credit. They lowered their prices. Weldon renamed the stores "Safeway" holding that buying in cash is the safe way to shop.

Weldon was a distributor. He didn't want the stores; So he sought the help of Charles Merrill who founded Merrill Lynch to unload the stores. (This was the deal that make Merrill Lynch the prime broker on Wall Street.)

Merrill Lynch bought the Safeway Stores. Weldon suggested that Lynch hire MB Skaggs who owned a chain of cash and carry stores in Idaho to run the stores.

Skaggs merged with Safeway. Skaggs became of the president of a company set on rapid expansion. Note: Skagg's brothers created Skaggs Drug stores.

So Merrill Lynch developed Safeway as a nice A-List stock with a strong balance sheet.

In the 1980s a corporate raider named Robert Haft saw an opportunity to leverage the strong balance sheet in corporate schemes that could turn a quick buck. Haft launched a hostile take over of Safeway.

To ward off the take over, Safeway jumped into the claws of Kohlberg, Kravis and Roberts. KKR is a pack of corporate raiders.

Safeway went heavily in debt in its effort to avoid the hostile take over and was forced to shed two thirds of its stores.

The company re-emerged from KKR with just 900 stores. It floundered for a few decades then was taken over by Cerberus Capital Management which merged Safeway with Albertsons.

Cerberus is named after a three headed dog that guards the gates to Hell in Greek Mythology. Dan Quayle, who was a GOP candidate for Vice President, is one of the heads of Cerberus. Big finance works with big government to consolidate the market. I am still working on the Albertsons and Skaggs pages.

The image is a public domain photo of a pot made circa 530 BC that features Cerberus.