Seeking Alpha

All quiet on the Safeway front

  • The $40-per-share offer for Safeway (SWY +0.2%) from Cerberus is the lowest valuation on a major food industry merger in the last ten years, according to Bloomberg. The deal price indicates low interest amongst major players for the struggling brand.
  • The "go-shop" period of 21 days is expected to be quiet with Kroger (KR +0.5%) seemingly unwillingly to come in over the top with a bid for the whole company.
  • Analyst take: Cantor Fitzgerald says the complicated Cerberus deal includes some risk for Safeway shareholders that the sale of property development centers won't generate the estimated returns. If that's the case, shareholders will earn less than the $40 bid price.
Comments (2)
  • jwanebo
    , contributor
    Comments (23) | Send Message
     
    Bravo to Kroger management .......Harris Teeter was good debt and accretive but Safeway is bad debt and venture capitalist Cerberus is now stuck with a bad deal. Safeway stockholders will be left holding the bag of a bankrupt company in the making. Kroger made the right decision to stay away, avoid bad debt, and stay focused on the shareholder best interests of value.
    12 Mar 2014, 11:49 AM Reply Like
  • riggle99
    , contributor
    Comments (213) | Send Message
     
    I have some hope that the current Albertson management will be able to turn Safeway around. They stay focused on the basics. What will be interesting to see is what stores Kroger may want to purchase from Cerebus.
    13 Mar 2014, 11:00 PM Reply Like
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