Lampert Unlikely To Bid On Safeway In Immediate Future

Jon Najarian of Options Monster, a highly respected trader who frequently appears on CNBC's Fast Money, pointed out some unusual buying activity in Safeway Stores Inc. (SWY) yesterday which moved the stock to the top of rumor heap. That's because there has been ongoing speculation that Eddie Lampert has been eying the company for a possible buyout. But this is a lot of the same talk that we've been hearing for a while. In November of 2006, the Chicago Sun-Times (which reported on the story again today) was tracking the next move of Lampert and named Safeway as one of his targets.

Yet vague but eyebrow raising comments from the hedge fund manager himself have also helped to raise suspicions. He said recently that Sears' (SHLD) "strong financial position and cash flow generation provide us with the flexibility to capitalize on a wide range of market opportunities as they arise... we are prepared to invest substantial amounts of capital if we identify other attractive investment opportunities." And so though a deal may certainly be in the cards, there is nothing yet specific or credible that suggests a takeover is imminent. Perhaps investors should steer their attention for now towards yesterday's new contract with the workers' union and second quarter results that were out this morning.

SWY 1-yr chart:

Comments

[bobbyjoe]

Sears has enough on its hands without worrying about integrating an acquisition the size of Safeway.