Safeway Inc., the second-largest U.S. grocery-store chain, agreed to be bought by Cerberus Capital Management LP’s Albertsons in a deal valued at about $9.2 billion, creating a bigger competitor to Kroger Co. and big-box rivals.

Safeway investors will receive about $40 a share, consisting of $32.50 apiece in cash, plus stock in its gift-card unit Blackhawk Network Holdings Inc., according to a statement issued Mar. 6. Safeway, based in Pleasanton, California, said last month that it was in talks about a sale of the company.

Albertsons and Safeway are seeking to cut costs and expand their reach amid mounting competition from Wal-Mart Stores Inc. and warehouse clubs, as well as online food sellers and delivery services. U.S. supermarket and grocery-store sales rose an estimated 0.4 percent to $531.4 billion in 2013 and are expected to decline 1.7 percent this year, according to a January report from research firm IBISWorld Inc.

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Editor's Note: A press release notes Cerberus through AB Acquisition LLC plans to fund the merger in part with debt financing of approximately $7.6 billion, equity contributions from its current investors and their affiliates, partners and co-investors of approximately $1.25 billion, and cash on hand of Safeway.  Safeway's existing indebtedness is contemplated to be repaid at closing, other than capital leases and the company's 5.00% Senior Notes due 2019, 3.95% Notes due 2020, 4.75% Senior Notes due 2021, 7.45% Debentures due 2027 and 7.25% Debentures due 2031.