US supermarket chain Safeway will be sold to investment group led by Cerberus Capital Management, the owner of grocery chain Albertsons.

Safeway CEO Robert Edwards will become CEO of the new firm, while Albertsons’ CEO will become executive chairman.

"There is a clear and compelling rationale for this merger,'' Mr Edwards said in an conference call with stock analysts. "This merger will improve our competitive position."

No store closures are anticipated but some stores may be sold off under competition rules.