PLEASANTON, CA - Safeway has reached a preliminary settlement on a class action lawsuit regarding supposed violated shareholder rights relating to the proposed merger with Albertsons. Subsequently, the company has accelerated the expiration date of the stockholder rights plan to June 19, 2014, three months ahead of the original expiration date. The settlement is still subject to the approval of the Delaware Chancery Court.

The memorandum of understanding provides for, among other things, an agreement by Safeway 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, which changes will be captured in the definitive proxy statement that Safeway intends to file with the U.S. Securities and Exchange Commission, according to a press release.

Earlier this year, a shareholder filed a lawsuit in attempt to halt the Safeway-Albertsons merger. The plaintiff alleged that the defendants “filed a materially false and misleading preliminary proxy statement” that omitted and/or misrepresented information that would affect Safeway shareholders’ ability to approve or disapprove the deal. For more on this story, check out the link below.

Safeway and Albertsons Sued Over Shareholder Rights Violations

The preliminary pact also states that the deadline to sell Safeway’s equity interests in Mexico-based food and general merchandise retailer, Casa Ley, has been shortened from four years to three years. If these interests weren’t sold by the deadline, the contingent value rights holders would be entitled to receive fair market value of the unsold value, according to Wall Street Journal. Previous terms state that the holders wouldn’t be entitled to receive any value linked to unsold assets.

Safeway and the Board of Directors of Safeway contend that the plaintiff’s claims are entirely without merit, and in the event the settlement does not resolve them, intend to vigorously defend these actions.

Stay tuned to AndNowUKnow as we keep an eye on this developing story.

Safeway