Safeway has put a plan in place to prevent outside entities from taking over company shares.
According to the Associated Press, the grocery store chain has chosen to use a "poison pill" to stop an unnamed investor from acquiring anymore stock from the company than it already has. The grocery store chain told Bloomberg in a statement that the new implementation will help prevent unfair trading.
"(The poison pill will help promote) fair and equal treatment of all stockholders," the company said.
The retailer, which is headquartered in Pleasanton, Calif., did not reveal who the investor was, but said one preferred stock purchase will be distributed for each share of common stock held as of Sept. 30
Recently, Safeway opted to sell its stores in Canada for $5.7 billion, and put its gift and prepaid card unit, also known as it's Blackhawk Network up for sale. It's this move Joe Feldman, a New York based analyst at Telsey Advisory Group, feels may help the company bring in more revenue.
"Maybe there's the thought that with the cash flow you could take on more debt," he said.
Safeway's shares went up 7.8 percent to $30.23 in New York marking the largest increase by a company in the Standard and Poor's 500 index. The percentage was also the highest increase company shares have had throughout the last five years. Before Monday, the company had built up 56 percent of its shares.
With its new plan, Safeway's stock is obtainable, those who earn 10 percent or more of common stock in the company, or 15 percent by an investor. A Safeway representative was not readily available to comment on the situation the AP reported.
In order to keep customers and adjust itself to growing competition from other retailers such as drug and specialty stores providing more groceries, the company is offering a "loyalty program" that gives customers personalized deals depending on what they have bought in the past.
