Safeway To Settle Class Action In Connection With Proposed Merger - Quick Facts

(RTTNews) - Safeway Inc. (SWY) announced its entry into a memorandum of understanding to settle the consolidated class action pending in the Court of Chancery of the State of Delaware filed on behalf of alleged Safeway stockholders against the company in connection with proposed merger with an affiliate of AB Acquisition LLC.

The memorandum of understanding provides for, among other things: an amendment to the definitive merger agreement to adjust certain provisions of the Casa Ley contingent value rights agreement and the PDC contingent value rights agreement; an agreement to terminate Safeway's stockholder rights plan, commonly referred to as a "poison pill," effective June 19, 2014; and certain changes to the proxy statement filed in connection with the proposed merger.

The changes to the terms of the PDC CVR Agreement provide that, among other things, the holders of the contingent value rights under the PDC CVR Agreement would, instead of not receiving any value for any assets of Safeway's shopping center portfolio that remain unsold at the end of the two year sale deadline period under the PDC CVR Agreement, be entitled to the fair market value of the unsold assets. The changes to the terms of the Casa Ley CVR Agreement, among other things, shorten the sale deadline period from four years to three years.

Originally scheduled to expire on September 15, 2014, Safeway's Board has amended the rights plan to accelerate the expiration date to June 19, 2014, effectively terminating the plan and the rights issued under the plan as of that date. Upon termination, Safeway will voluntarily delist the rights from NYSE. The company expects the withdrawal to be effective on July 3, 2014.