PLEASANTON, CA
Albertsons still remains as the sole bidder for Safeway following the end of its 21-day “go-shop” period. None of the parties contacted by Safeway during the period indicated any interest in pursuing an alternative transaction under the merger agreement, according to a press release.
It was previously rumored that Kroger was reportedly in talks with Cerberus Capital Management LP over the $9 billion Safeway deal, but it appears a potential takeover won’t be the case. If a company like Kroger were to take a sudden interest, they would now have to pay a $250 million termination fee to pursue a deal.
Safeway is now operating under customary “no shop” provisions that limit its ability to solicit alternative acquisition proposals from third parties or to provide confidential information to third parties, subject to customary “fiduciary out” provisions.
Now that Albertsons and Safeway will almost assuredly merge, how will these supermarket giants compete against Kroger? In a previous DeliMarket TV article, linked below, we compared how the Albertsons and Safeway merger will stack up against Kroger.
How does the Safeway and Albertsons Merger Stack Up Against Kroger?
During an investor conference, Kroger’s CFO, Michael Schlotman, showed little to no concern regarding the Albertsons/Safeway deal, noting, “They’ll generate a lot of synergies, but they’re going to be pretty levered. They’re going to have a fair amount of interest expense to cover. So I think it’ll remain to be seen how much net synergy dollars they have left to invest in competitive activities versus giving a return to the equity investors that we’re going to have as well as the debt carry load – the interest on the debt load they have.”
You can see his other comments regarding the deal in the link below…
Kroger CFO Mike Schlotman Shares his Thoughts on the Albertsons and Safeway Merger
The closing of the Albertsons/Safeway merger is expected in the fourth quarter in 2014. Now that the “go-shop” period is over, it seems unlikely that any future deal will emerge…but stay tuned to DeliMarket TV as we continue covering this massive supermarket deal.
Safeway
