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!

Antitrust Hurdles Pushed Rival Shopper From Safeway

NEW YORK (The Deal) -- Antitrust concerns led an interested suitor to drop its consideration of a rival bid for Safeway (SWY).

Details of the talks that led to Albertson's $9 billion agreement to acquire Safeway were disclosed in the preliminary proxy filed with the Securities and Exchange Commission Friday. The rival suitor, widely presumed to be Kroger (KR), backed out of talks Safeway during the go-shop period after the Albertson's deal was announced Mar 6.

On March 21, 2014, the would-be suitor informed Goldman Sachs (GS), the financial advisor to Safeway's board, that it would not be submitting a bid because the costs associated with making the divestitures likely to be necessary to obtain antitrust clearance made it unwilling to offer a proposal superior to Albertson's. Besting Albertson's bid would not have allowed the potential bidder to realize a sufficient return on its investment, according discussions revealed in the proxy.

Before the Albertson's deal was announced, Deutsche Bank  (DB) analyst Karen Short predicted that Kroger would have to divest 161 stores to win antitrust clearance whereas Albertson's would have to sell only 25.

An antitrust source cautioned that Short and other Wall Street analysts who have made predictions about the possible divestitures generally have overstated the size of the markets that the Federal Trade Commission will examine. Rather than view stores within a broad metro area as overlapping, the agency will consider only stores within close enough proximity to each other to compete for the patronage of the same households.

Albertson's and Safeway officials have shown little concern about the extent of divestitures that the FTC will require. The commission issued a second request for information extending its review of the merger on April 10.

During the lead up to the formal announcement of the deal with Albertson's, there was a great deal of speculation that Safeway would get to choose from two competing bids.

1 of 3

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 16,454.47 -108.83 -0.66%
S&P 500 1,918.02 -12.65 -0.66%
NASDAQ 4,330.4880 -39.2850 -0.90%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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