NEW YORK (AP) -- Safeway adopted a plan to prevent a hostile takeover after learning of a significant accumulation of its stock by an unnamed investor.
The announcement Tuesday sent shares of the grocer spiking 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.
A representative for the company wasn't immediately available for comment Tuesday.
The grocer, which also operates Vons, noted that it has taken a number of strategic initiatives to increase value for shareholders, including the recent $5.7 billion sale of its Canadian unit. Like other traditional supermarket operators, Safeway is trying to adapt amid growing competition from big-box retailers, drug stores and specialty stores that have been expanding their grocery sections.
Safeway has invested in a loyalty program that offers personalized deals based on a customer's past purchases.
In its fiscal second 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 in its most recent quarter.
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 7 percent to $30.08.
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