So KKR or someone else buys SVU.
What is a realistic buy-out pps given the assets and liabilities. I don't have a sharp enough pencil for this exercise, but some of you better-informed folks must have a clear-eyed idea.
I can't come up with an exact figure, but I strongly suspect the breakup value of Supervalu is considerably higher than the company as a whole.
Save-A-Lot and the wholesale business are attractive properties and should sell for quite a good price. The individual banners might garner interest from one or more regional players looking to expand or fill in their existing territories depending on their union/nonunion status. The healthiest banners, such as Jewel-Osco, might survive intact under Kroger or private equity. The supermarket business is a notoriously low-margin enterprise, and many of the stores need extensive renovations to make or keep them competitive, so don't count on the banners selling for anywhere near what SVU paid back for them way back in 2006.
The dissolution of SVU will take some time to play out, and we can expect it to take a number of twists and turns along the way. Hang tight.
I've been buying and selling grocery and drug retail stocks since 1984. I've seen various mergers, acquisitions and spinoffs. Here's my take: In 1999 SVU bought Richfood. Richfood added the mid-Atlantic market bringing sales up to $20 billion a year. SVU paid $1.5 billion at that time. Everything was "fine" until they overpaid for Albertsons.
I'd say they might just sell Albertsons to rid itself of the debt. That leaves the distribution, pieces of retail not associated with Albertsons and of course Save-A-Lot.
For those three parts, that might bring $2 billion to $3 billion.
Even the most informed person in the world does not know a realistic buy out price. No due diligence has been performed and this remains a highly leveraged enterprise which triggers large amounts of volatility.
Besides, until the new debt agreements are in place SVU is at risk of filing bankruptcy as that loan commitment letter certainly has contingencies that allow them to back out. I don't think that will happen, I'm just saying it is a possibility.
I'd say 1.5 billion...I not sure what that comes out to per share...spend 1.5 pay down debt (6 billion)....with no debt
expense you could easily generate 2 billion in cash....seems
like 1.5 billion buyout would be darn cheap...it might go higher.........