This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Acquisition Of Safeway, Inc. By Cerberus Capital Management May Not Be In Shareholders' Best Interests

SAN DIEGO and PLEASANTON, Calif., March 7, 2014 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the proposed acquisition of Safeway, Inc. (NYSE: SWY) by the private equity company Cerberus Capital Management. On March 6, 2014, the companies announced the signing of a definitive agreement pursuant to which Safeway shareholders will receive $32.50 per share in cash and additional consideration with an estimated value of $3.65 per share, for a total consideration of $36.15 per share.

Robbins Arroyo LLP. (PRNewsFoto/Robbins Arroyo LLP)

Is the Proposed Merger Best for Safeway and Its Shareholders?

Robbins Arroyo LLP's investigation focuses on whether the board of directors at Safeway is undertaking a fair process to obtain maximum value and adequately compensate Safeway shareholders.  

As an initial matter, the $36.15 merger consideration represents a premium to shareholders of just 6.0% based on Safeway's closing price on February 18, 2014, the last day of trading prior to the announcement that Safeway was in discussions to sell the company. This one day premium is significantly below the average one day premium of over 20% for comparable transactions in the last three years. Further, prior to the announcement of the merger, there were seven analysts with target prices higher than the $36.15 merger consideration, including analysts at Telsey Advisory Group and Wolfe Research, LLC who each set a price of $46.00 on February 20, 2014.

In addition, on February 19, 2014, Safeway released its financial results for the fourth quarter 2013, reporting increases in sales and other revenue as well as gross profit. Specifically, Safeway reported that the company's sales and other revenue reached $11.3 billion in the quarter and its gross profit increased 20 basis points 26.52%.  In announcing the company's result, Safeway's President and Chief Executive Officer Robert Edwards stated, "We are pleased with the progress we made in 2013.… Strategies to grow sales and improve operating profit dollars have begun to produce results. In 2013, we generated our best volume growth since 2006, and we had our best identical-store sales growth in the last five years. At the same time, we continue to pursue strategies to enhance momentum and increase shareholder value. We look forward to continuing progress in 2014."

Given these facts, Robbins Arroyo LLP is examining the Safeway board of directors' decision to sell the company to Cerberus now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects. 

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs