Seeking Alpha

Cerberus buying Safeway; shares -4.9% AH

  • As rumored, Supermarket chain owner Albertsons, controlled by an investor group led by P-E firm Cerberus, is acquiring Safeway (SWY). Investors are unhappy with the specific deal terms. (PR)
  • 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).
  • The deal is expected to close in Q4, has a $400M termination fee, and comes with a 21-day go-shop period. Albertsons plans to fund the deal with the help of $7.6B in debt financing.
Comments (11)
  • AdamDivy
    , contributor
    Comments (417) | Send Message
     
    Not what I expected when they said $40.
    6 Mar 2014, 05:15 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4277) | Send Message
     
    go-shop period of 21 days? does that mean SWY is going to try and get a better price from another party?
    6 Mar 2014, 05:48 PM Reply Like
  • Rhinoish
    , contributor
    Comments (113) | Send Message
     
    Looks like a good deal to me. I only wish I had bought SWY at 17 at the beginning of 2013. Instead I bought WFM. BAH
    6 Mar 2014, 08:38 PM Reply Like
  • remo1
    , contributor
    Comment (1) | Send Message
     
    does anyone have a comment on the debt
    6 Mar 2014, 11:05 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4277) | Send Message
     
    remo1: the debt has already been retired from usage of the Canadian proceeds.
    7 Mar 2014, 08:25 AM Reply Like
  • jumpnjoey77
    , contributor
    Comments (718) | Send Message
     
    My puts are in the money.
    7 Mar 2014, 12:27 AM Reply Like
  • june1234
    , contributor
    Comments (3066) | Send Message
     
    2 failed chains. Good luck going up against Kroger and wall mart.
    7 Mar 2014, 02:50 AM Reply Like
  • sidgreen60
    , contributor
    Comments (21) | Send Message
     
    Safeway does not stand a chance against all the competition. Been getting killed in Houston closing stores right and left.
    7 Mar 2014, 08:43 AM Reply Like
  • scabalqu
    , contributor
    Comments (264) | Send Message
     
    unfortunately, this is an all-stock deal. NO cash is involved.

     

    Which means that the resulting company will be a highly leveraged company with very little room to maneuver if things get worst for the parent company.

     

    of course, the parent company can sell more real estate to help finance continuing operations, close more problem stores and terminate more employees. they will have to consolidate shipping and other logistics operations to save money.

     

    if done right, walmart may have competition.

     

    good luck to them.
    7 Mar 2014, 10:10 AM Reply Like
  • 999231
    , contributor
    Comments (7) | Send Message
     
    Yes Mark it is a legal process, the go-shop process is a legal requirement
    8 Mar 2014, 08:45 AM Reply Like
  • User 590413
    , contributor
    Comment (1) | Send Message
     
    Like everyone else I am very confused. Do we get $40.00 when the sale goes through? Or is it better to sell now at the price quoted today that was $38.88?
    10 Mar 2014, 08:49 PM Reply Like
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