Bullish Analyst Sees Deal For Safeway Between $45 And $55

Deutsche Bank released a note speculating on potential “dance partners” for Safeway

. Karen Short, analyst at Deutsche Bank, sees a “$45-$55 valuation for a deal factoring in potential deal synergies.” The first suitor could be Cerberus, which would need to “sell only ~25 Safeway stores in a handful of markets translating to ~$610M in revenue and ~40M in EBITDA,” according to Short. Kroger is the potential second suitor. Short believes “~160 stores would have to be divested, which would be small relative to each company's store base.” For the same 160 stores to be divested, Short arrived at “total sales impact of $4.8B and EBITDA impact of $241M. Short maintains a Buy rating and $40 price target on shares of Safeway. Shares of Safeway are up 1.79 percent to $37.62 Thursday. Kroger shares are up 0.37 percent to $40.17.