Rumours that Sears Holdings could be considering making a bid to acquire Safeway in a deal valued at over US$20bn have had little impact on the supermarket group’s share price, with analysts suggesting that such a move seems highly unlikely.
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When contacted by just-food neither Sears nor Safeway were willing to comment on the speculation, which was first published yesterday (9 November) in a report by investment research firm Briefing.com.
Delivering the company’s second quarter results in August, Searschairman Edward Lampert had indicated that his company was on the hunt for acquisitions. “Our strong financial position and cash flow generation provide us with the flexibility to capitalise on a wide range of market opportunities as they arise,” Lampert commented. “We are prepared to invest substantial amounts of capital if we identify other attractive investment opportunities.”
However, analysts are generally of the opinion that operating in the highly competitive low-margin grocery sector and attached to a high-price tag, Safeway would be a poor fit for Sears.
While shares in Safeway did edge up slightly on the reports, reaching a high of $31.33 in trade yesterday, the company closed at $30.91, up only $0.40.
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