Safeway Go-Shop Period Ends, Downgraded to Hold by Deutsche Bank

On Monday, Deutsche Bank downgraded shares of Safeway

from Buy to Hold and maintained a $40 price target. Analyst Karen Short noted that Safeway is now subject to a “No Shop” provision, which “limits their ability to solicit alternative acquisition proposals.” The analyst is not surprised no alternate bid has emerged. Should another bidder emerge, “the break up fee would be $250m,” said the Deutsche Bank analyst. Three weeks may not have been enough time for Kroger

to make a “risk free” offer to counter the Cerberus bid. Kroger would have needed to provide “detailed market by market concentration analysis,” which was “simply not possible in a 21-day period,” said Short. Shares of Safeway finished 0.97 percent lower to $36.94 in Monday's trading.