An investment group led by grocer Supervalu Inc. (SVU) and drugstore chain CVS Corp. (CVS)said Monday it will buy Albertson's Inc. (ABS), the nation's second biggest traditional grocery store chain, for $9.7 billion in cash and stock.

Albertson's stockholders will get $26.29 per share in cash and Supervalu stock. The investment group made a similar attempt to buy Albertson's about a month ago, but the deal collapsed. The buyers are also assuming about $7.7 billion in debt.

Minneapolis-based Supervalu will become the nation's second-largest grocer, behind Kroger Co. (KR), with the takeover of 1,124 stores under the Albertson's, Acme Markets, Bristol Farms, Jewel-Osco, and Shaw's Supermarkets banners.

Albertson's shares rose $1.05, or 4.4 percent, to $25.16 on the New York Stock Exchange, while Supervalu shares rose 93 cents, or 2.9 percent, to $32.78 and CVS shares fell 13 cents to $27.

Supervalu will pay about $6.3 billion in stock and cash and assume about $6.1 billion in Albertson's debt. Supervalu will also the acquire in-store pharmacies under the Osco and Sav-on brands.

The purchase has been approved by the boards of all the companies involved. If shareholders and regulators also approve, Supervalu will about triple in size to 2,656 stores nationwide, said Jeff Noddle, Supervalu chairman and CEO.

Noddle said combining the leadership at Supervalu with the acquired retail operations will create "a company with better potential for growth and profitability than a stand-alone Supervalu."

Supervalu spokeswoman Yolanda Scharton said the purchase will expand the company beyond its current base in the East, Southeast and Midwest. "With all this, it's all states, coast-to-coast and border-to-border," she said.

The company currently employs about 57,000 people. The Albertson's properties in the deal have about 144,000 workers. She said it was too soon to say how many of them would remain with the combined companies, but added, "we believe the vast majority of these employees will remain with us."

CVS of Woonsocket, R.I., is purchasing about 700 stand-alone Sav-on and Osco Drugstores and a distribution center in La Habra, Calif. for $2.93 billion in cash. It will also acquire estate interests in the drugstores for $1 billion in cash.

Already the largest drug store chain in the nation, CVS said it will operate 6,100 stores across 42 states and the District of Columbia after the deal closes, which is expected this summer.

Tom Ryan, chairman, president and CEO of CVS Corp., said in a prepared statement that the acquisition provides a base for future growth in California.

"The stores we have opened there to date are performing well ahead of our expectations," he said. "However, finding desirable real estate in southern California is challenging and takes longer than in most other parts of the country.

Larry Johnston, chairman, CEO and president of Albertson's, said in a prepared statement that the purchase of his company would benefit its shareholders.

"We believe this transaction increases shareholder value by capturing strong value for the ongoing business enterprise, monetizing valuable real estate assets, and affording shareowners the opportunity to benefit from a substantial continuing ownership interest in a powerful, growing, and vibrant new company."

The transaction assumes the settlement of the Albertson's Hybrid Income Term Security units, the companies said.

The other purchasers, led by Cerberus Capital Management, will acquire 655 stores in Dallas/Fort Worth, California, Florida, the Rocky Mountains and the Southwest. The group plans to operate the stores under the Albertson's name.

Following the transaction, approximately 65 percent of the new Supervalu will be held by existing Supervalu stockholders, and approximately 35 percent will be held by Albertson's stockholders.