PLEASANTON -- In a move poised to rattle the supermarket industry, one of the East Bay's largest employers, Safeway, announced Wednesday that it is in talks to sell the company.
The announcement, which came with few details and left analysts and investors to guess at who the buyer might be, caps a year of dramatic downsizing as the nation's second-largest grocery chain has shed hundreds of unprofitable stores, trying to fit into a crowded and specialized landscape that is increasingly difficult for mega-supermarkets.
''The concept of having a number of major supermarket chains that have thousands and thousands of stores is antiquated," said Phil Lempert, industry analyst and editor of SupermarketGuru.com. "The supermarket industry is in a huge state of flux right now. This hopefully staves off further erosion."
While Safeway did not disclose the buyer, many industry watchers believe it to be New York-based Cerberus Capital Management, a private equity firm. When Cerberus acquired about 600 Albertsons stores in 2006, it pared them down to about 200 by early 2013.
That may mean some of the less profitable Safeway stores -- including stores in low-income areas -- get shuttered. And stores that Safeway leases may also close.
"In certain areas that had been marginal, stores could close," Lempert said. "Jobs would be lost."
But a possible Safeway sale also spells worry for Pleasanton, where Safeway is based. The company is the fifth-largest employer in the East Bay, according to the East Bay Economic Development Alliance.
"It's disquieting because it means there will be changes," said Mike Henneberry, spokesman for the local chapter of the United Food and Commercial Workers union, which represents Safeway employees. "Sometimes change can be good, and sometimes change can be bad. So we'll have to play this by ear."
Pleasanton Mayor Jerry Thorne could not be reached for comment Wednesday evening. Safeway also could not be reached for comment.
Safeway announced it was considering selling the company shortly before a call with analysts to discuss fourth-quarter earnings, which largely beat analysts' expectations. But the company cautioned the talks were continuing and an agreement had not been reached.
On the call, Chief Executive Robert Edwards said "we expect to continue our discussion" with the prospective buyers and promised to "update our progress when it's appropriate."
Cerberus cemented its place in the supermarket industry last year when it acquired Supervalu, which includes hundreds of supermarkets under various brand names around the country.
In October, Cerberus was rumored to have led a group of private equity firms in a plan to take over Safeway. Safeway would not comment on those reports, but sources said at that time that Safeway officials were in talks with financial adviser Goldman Sachs.
News service Reuters reported Wednesday that Cerberus is in talks with Safeway about a possible transaction, according to a person familiar with the matter. But neither Cerberus nor Safeway would comment on the matter.
News of the possible sale also sheds light on the retirement of former CEO Steve Burd last May. Experts say Burd was probably involved in talks about selling Safeway but did not want that as part of his legacy.
"He has not been gone long enough to not be involved in this," Lempert said. "A company this size has got to have a plan in place. It's not like someone came up to them with a check yesterday."
The former Safeway chief spent more than two decades at the company's helm, much of it on a buying spree, acquiring stores that were sold off just weeks after his departure. Safeway announced in June it would sell 213 full-service grocery stores in western Canada to Canada-based food retailer Sobeys for $5.2 billion. In October, Safeway announced it would spin off its 72 Chicago-area Dominick's stores, which were mostly unprofitable.
"The portfolio no longer consists of the loser stores," said Bob Reynolds, grocery analyst with Reynolds Economics and a former Safeway employee. After the downsizing, "one shouldn't be surprised that something is underway."
The question now, he said, is what a buyer would do with Safeway's 1,400 stores -- use them as a real estate investment, break up the company and sell it off, or preserve the Safeway brand?
Safeway is one of the few national supermarket chains that has not yet been acquired as regional and discount stores eat away at the market. Traditional supermarkets have lost 15 percent of the market to the Walmarts, Whole Foods and Trader Joe's of the grocery world.
The company deflected a hostile takeover by Jana Partners in September after the investing group amassed a significant portion -- 6.2 percent -- of its stock. And in the 1980s, Safeway went private to escape a hostile takeover by the Haft family of Washington, D.C.
Contact Heather Somerville at 510-208-6413. Follow her at Twitter.com/heathersomervil.