NEW YORK (AP) — Safeway adopted a plan to prevent a hostile takeover after learning of a significant accumulation of its stock by an unknown investor.
The announcement Tuesday sent shares of the grocer spiking 8 percent 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.
The company has been unable to confirm who the investor is and spokesman Brian Dowling said that Safeway couldn't be more specific about the size of the stake that the investor had accrued.
The grocer, which also operates Vons, did point out the strategic initiatives it has undertaken to increase value for shareholders, including the recent $5.7 billion sale of its Canadian unit and the initial public offering of Blackhawk Network, its gift and prepaid card unit.
Like other traditional supermarkets, Safeway is also trying to adapt amid growing competition from big-box retailers, drug stores and specialty stores that have been expanding their grocery sections.
A centerpiece of Safeway's push to hold onto customers has been a loyalty program that offers personalized deals based on a shopper's past purchases.
But in its most recent 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.
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 $2.31 to $30.35.