Author Topic: SWY - Safeway  (Read 71851 times)

fareastwarriors

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Re: SWY - Safeway
« Reply #230 on: March 09, 2014, 10:53:45 PM »


luck

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Re: SWY - Safeway
« Reply #231 on: March 10, 2014, 01:53:44 PM »
Hi FCharlie-

Great work on $SWY.  I think they gave it to Cerberus early as well.  Now trying to figure out whether to take profits or wait a little.

A few questions:

1.  I know you think the odds off shareholders successfully voting against this are low, but wondering if you see this as a 5%, 10% chance, etc.?
2.  Also, given the hefty penalty, wondering where you put the odds that Kroger will throw in a higher bid in the 21 days?
3.  From what I recall, $SWY was heavily shorted, wondering what your thoughts are on the near term price effects of short covering on the stock?

Also, would love to hear what other members think about whether to take profits here or wait awhile.  Thanks in advance.


FCharlie

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Re: SWY - Safeway
« Reply #232 on: March 10, 2014, 07:06:56 PM »
Hi FCharlie-

Great work on $SWY.  I think they gave it to Cerberus early as well.  Now trying to figure out whether to take profits or wait a little.

A few questions:

1.  I know you think the odds off shareholders successfully voting against this are low, but wondering if you see this as a 5%, 10% chance, etc.?
2.  Also, given the hefty penalty, wondering where you put the odds that Kroger will throw in a higher bid in the 21 days?
3.  From what I recall, $SWY was heavily shorted, wondering what your thoughts are on the near term price effects of short covering on the stock?

Also, would love to hear what other members think about whether to take profits here or wait awhile.  Thanks in advance.

5% or 10% may be about right. The options market still has some value in the $40 strike if you go out a little bit... Not a lot of premium, but a little.... If there were a zero chance of a higher bid there should be a zero bid on the $40 strike, all other things being constant.

I don't expect Kroger to bid. I think Safeway and Albertsons will merge, Cerberus will IPO the merged company in a few years after they gut the company of all it's cash and real estate and make a nice triple digit return for themselves.

Volume has been high. I don't think shorts have had any difficulty covering.




fareastwarriors

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Re: SWY - Safeway
« Reply #233 on: March 11, 2014, 10:58:52 AM »
Safeway’s Low Deal Valuation Is Best It Can Get




Quote
Even if Kroger offered $45 to buy the whole company, Safeway would still be getting the lowest profit multiple for a food retail deal of more than $1 billion since 2004, according to data compiled by Bloomberg.




http://www.bloomberg.com/news/2014-03-10/safeway-s-low-deal-valuation-is-best-it-can-get-real-m-a.html

Sportgamma

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Re: SWY - Safeway
« Reply #234 on: April 10, 2014, 04:44:48 AM »
Here´s something I don´t get...

The record date for the HAWK spin-off was the 3rd of April and for each SWY share you get about $4 worth of HAWK. So if I buy SWY today, I won´t get any HAWK shares. Still, the price of SWY hasn´t corrected. Why?

thepupil

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Re: SWY - Safeway
« Reply #235 on: April 10, 2014, 05:44:59 AM »
Here´s something I don´t get...

The record date for the HAWK spin-off was the 3rd of April and for each SWY share you get about $4 worth of HAWK. So if I buy SWY today, I won´t get any HAWK shares. Still, the price of SWY hasn´t corrected. Why?

a spinoff/special divvy record date and a normal dividend record date work differently.

http://groupssa.com/understandingdividenddates.html

 "Here's the big (and confusing) difference:  While the ex-dividend date is indeed set by the exchange, it occurs not before the record date, but after.  In fact, the ex-dividend date is not even before the payment  date!  By rule, the ex-dividend date is one business day after  the payment date.  (In such cases the term deferred ex-date  applies.) ......

Note: Although this page is an explanation of how cash dividend dates work, deferred ex-dates are also used, under certain circumstances, with stock dividends, spinoffs and warrant issues.  With those types of distributions the 25% threshold is not a factor, as often times the value of a spinoff or warrant is not known at the time of declaration.  However, any time a deferred ex-date is applicable, no matter if the distribution is in cash or securities, the deferred ex-date rules explained here, including the due bill process, apply....

In cases of a deferred ex-date, the only  function of the record date is to determine on which shares the dividend is paid.  Because of that -- and this is a critical point -- it is the ex-dividend date that determines who qualifies for the dividend, not  the record date."

fareastwarriors

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Re: SWY - Safeway
« Reply #236 on: April 10, 2014, 02:33:23 PM »
Safeway Gets Second FTC Request for Merger Info

Notice Extends Closing Date for Combination With Albertsons


http://online.wsj.com/news/articles/SB10001424052702304058204579493873883287740?mod=WSJ_hp_LEFTWhatsNewsCollection&mg=reno64-wsj

Sportgamma

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Re: SWY - Safeway
« Reply #237 on: April 22, 2014, 04:47:48 AM »
Quote
“Company A,” which was previously identified as Kroger Co. by The Wall Street Journal, was willing to pay up to $42 a share for Safeway, pending further due diligence, according to the proxy statement. That was more than Cerberus offered, but concerns over antitrust risk led Safeway to strike a deal with the private-equity firm instead, the document shows.

http://blogs.wsj.com/moneybeat/2014/04/21/takeaways-from-the-safewaycerberus-proxy/?mod=yahoo_hs

bizaro86

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Re: SWY - Safeway
« Reply #238 on: May 21, 2014, 10:00:27 AM »
Anyone have any thoughts on the value of the contingent value rights? I thought the terms of the real estate one were especially unfriendly, where at the end of two years anything not sold reverts back to the company. Still, you'd be paying ~1.59 for something with an estimated value of $3.65. Based on the very limited financial information in the presentation linked above, that $3.65 seems to be not far off what those businesses should be worth. Would appreciate thoughts from anyone still holding or considering the arbitrage here.

writser

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Re: SWY - Safeway
« Reply #239 on: January 28, 2015, 10:35:38 AM »
An interesting trade idea:

http://www.seekingalpha.com/article/2809635-a-not-so-obvious-way-to-make-money-with-safeway
http://www.alphavulture.com/2015/01/27/safeway-merger-arb-get-the-casa-ley-cvr-on-the-cheap/

Summary: Safeway issued a press release yesterday stating that they expect its sale to materialize within 5 business days. At this point you can buy Safeway for $35.18, get back $34.88 in cash within a few weeks. You end up paying approximately $0.30 for two non-tradeable CVR's the company is valuing at $1.07 - $1.47.

I bought a decent clip of SWY as well as a few $34 puts for $.05 to hedge my position in case something goes horribly wrong. I'm no expert on merger arbitrage but even if the chances of this deal falling through are 25% this is quite a good trade.

Worst case scenario: deal is cancelled and I lose ~$1.2 per share, roughly 3%.
Best case scenario: I get back my cash in a few weeks and bought a small position in CVR's that are worth $1.50 for $0.30.
« Last Edit: January 28, 2015, 11:02:22 AM by writser »
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