Safeway Buyout Report Continues To Swirl

    October 24, 2013
    Jennifer Curra
    Comments are off for this post.

Talks have been spreading through the Web since Tuesday’s revelation by Reuters about a potential buyout for Safeway Incorporated. The company even saw shares rise on Wednesday as a result of the news.

Cerberus Capital Management LP is one private firm considering either a full or partial buyout. For now, the supermarket chain, which is based out of Pleasanton, California, has not released an official statement on the matter. This has not stopped financial gurus from discussing the implications of a potential buyout.

Gavan Nolan of Markit’s released the following statement: “It is all just speculation at the moment, but the high risk premium attached to Safeway – it was already trading with an implied rating of BB – indicates that the market sees it as a possible LBO candidate.”

Competition is tight for grocery stores, with the “everything” stores of Walmart and Target honing in on the market. News broke in September that Jana Partners had gained 6.2 percent stake in Safeway Incorporated, which caused concern for a possible takeover at that time.

According to Ajay Jain, who is a Cantor Fitzgerald analyst, “We feel that the key consideration for the stock right now is whether Safeway can generate enough proceeds from disposals to actually generate incremental value. In this context, we still fail (to) see how the math adds up.”

Good news for investors. Reports claim that the stock has increased 80 percent in 2013, and that shares in the most recent trading were at $35.76.

News about the potential buyout continues to swirl, in part, since Safeway is somewhat of a grocery powerhouse. The company is the second largest grocery chain in the United States and masses a $8 billion market value.

[Images Via Wikimedia Commons And Courtesy of Mattie B from Santa Cruz and xnatedawgx]
  • Trader Joe

    Cerberus /ˈsɜrbərəs/,[1] or Kerberos, (Greek form: Κέρβερος, [ˈkerberos])[2] in Greek and Roman mythology, is a multi-headed (usually three-headed) dog, or “hellhound” [1][3][4] which guards the gates of the Underworld, to prevent those who have crossed the river Styx from ever escaping.So Safeway will be owned by a 3 headed “Hellhound” which will prevent your soul from ever leaving once you enter. At least Safeway let you Leave!