Seeking Alpha

Report: Cerberus strikes deal for Safeway

Cerberus has reached a preliminary deal to purchase Safeway (SWY -0.2%), according to the WSJ.

The deal price is reported to be $40/share for an enterprise value of $9B.

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Comments (7)
  • vmetla
    , contributor
    Comments (69) | Send Message
    I think 40$ is too low. No premium at all.
    6 Mar 2014, 04:15 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (5156) | Send Message
    the shares are considerably higher from the time SWY first announced they were intending to sell themselves. Besides, the $40 offer probably does not include the HAWK shares, which are probably worth $2-3 by themselves.
    6 Mar 2014, 04:50 PM Reply Like
  • davidhsuphd
    , contributor
    Comments (2) | Send Message
    Agreed. Operating cash flow at $SWY is so large that up to 50% of share float could have been retired within 4 years even while maintaining dividends. Implications for share price are enormous.


    Cerberus deal is unimpressive. Low cash value, puts too much risk of valuation onto shareholders, long time to close ... I'm voting against.


    The whole idea of a LBO is for the buyer to assume the valuation risk in exchange for the return. To have two contingent pieces of the deal shows how weak Cerberus' hand is.


    I'm in no hurry to sell SWY. It will be a $50 stock within 2 years if it stays independent.
    7 Mar 2014, 01:05 AM Reply Like
  • jaginger
    , contributor
    Comments (812) | Send Message
    The $40 headline number includes $3.95 of value for HAWK shares (see below.)


    Albertson's will pay $32.50/share in cash, distribute proceeds from the sale of Safeway's real estate subsidiary assets and Casa Ley stake (estimated value of $3.65/share), and distribute Safeway's 37.8M Blackhawk Network (HAWK) shares (current value of $3.95/share).
    7 Mar 2014, 11:06 AM Reply Like
  • Mark Krieger
    , contributor
    Comments (5156) | Send Message
    it is a premium from where the shares were before SWY revealed they intended to sell the company...besides we might still get the Blackhawk shares in addition to the $40 cash offer, and they are worth at least another couple of bucks.
    6 Mar 2014, 04:21 PM Reply Like
  • AdamDivy
    , contributor
    Comments (415) | Send Message
    Weren't shareholders already told they would get Blackhawk shares? Could they take that off the table now?
    6 Mar 2014, 05:07 PM Reply Like
  • hummerh25
    , contributor
    Comments (99) | Send Message
    Cerbrus is buying a company that can't compete with the other chains. Bad deal for them, great deal for Safeway management.
    6 Mar 2014, 08:14 PM Reply Like
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