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No Love for Safeway's Shareholders

By Chris Hill – Mar 7, 2014 at 8:48PM

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Grocery store chain Safeway is going public, but shareholders are getting no love from the deal.

Safeway (NYSE: SWY), the second largest grocery chain in the U.S., has announced that it will be taken private by private equity firm Cerberus Capital. The firm will be paying $40 per share for Safeway in a $9 billion deal that will bring the grocery chain under the Cerberus umbrella to join Albertsons, which should help the business in terms of scale to take on other grocers like Kroger (KR -1.22%), or even the big-box retailers that also sell groceries, such as Wal-Mart (WMT -1.33%).

In this video from Friday's Investor Beat, host Chris Hill and Motley Fool analyst Ron Gross discuss Safeway. While investors are seeing virtually no premium to the current stock price in the buyout, Ron notes that there has been talk of this being a possibility for a while now, and the stock's growth during the past few months reflects the idea of a buyout being already baked in to today's price.

Chris Hill has no position in any stocks mentioned. Ron Gross has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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