Safeway will be bought by pvt equity late q-2 2013
1-Company changed corporate retention plan in case of change of control q-1 2012
2-Company levered up the balance sheet and
4-Company has finished store remodels, and
5-announced three new initiatives that will be rolled out over next 2 q's wellness Just for U and fuel.These initiative will be fully rolled out by q-2 but the results won't be realized until a few quarters later
6-Company will spin off Blackhawk in q-1 giving them about 800mm dollars in marketable securities after IPO.
Pvt equity deal goes something like this-- offer 25% premium. Funding for buyout is 1B equity from pvt equity firm and 5B mezz loan at 8%. debt service of 400mm is less than 600mm FCF. Done. Sell off Blackhawk shares 800mm-- Now net investment is only 200mm. Sell off Dominicks or teaxs stores for 400mm Use half to pay debt and pocket the rest. Cut capex to 500mm for a few years, start paying yourself 20mm a year or so and pay down 2b in mezz debt and refi the rest at better rates. Return? Inifinite
All the ducks are in a row. I think the deal has ready been done. Pvt equity lining up money as we speak.
Don't bother to sass. It's just my opinion but it makes a lot of sense. All I need 1B to do it myself
was in Vegas and golfed with a guy who is upper/middle mgmt in SWY IT dep't. Talked about Blackhawk and Just for U. He doesn't have much to do with Blackhawk any more because they have a dedicated team. But was involved in the build out. But he said the volume on their servers from Just for U is growing rapidly-- On an unrelated note he believes SSD's will takeover for spinning drives in the enterprise space in 10 years or less. Sell STX and WDC. He said SWY buys a lot of SSD gear and software from EMC.
Whether it happens or not, what you've just laid out is exactly why the gap between rich and poor keeps growing wildly in this country... It's easy to know how to make money but you need money to do it. Having a $1 Billion allows you to control your own destiny.
Meanwhile, I'll continue buying/ reinvesting on this one and just hope that it doesn't get taken over because it's such a good deal.