storewanderer wrote: ↑May 7th, 2024, 12:00 am
At some point someone blinks. I don't think they have until November. They need to move on. This can't stay tied up forever. The two companies can't stay in limbo forever.
Let's see how earnings/profits with both companies are in the coming 3 months. I think the opportunity for someone to "blink" may come with bad earnings blamed on inflation/merger uncertainty/"pressured consumer"/cuts in food stamps/whatever.
But what happens then. Does C&S buy Albertsons as a whole?
Do we see a restructured deal where Kroger takes non-overlapping assets and C&S gets the rest (that sure would smell like the Supervalu/Cerberus Albertsons carve up all over again)...
I don't think the deal in its current form being canceled represents the end of a deal. Unless Kroger seriously falters. Which when I look at how they run things, feel could happen at any time.
I do not see C&S being involved in any deal to acquire anything but cast offs. They are not a long term operator and I do not see them changing. That is the entire criticism of their involvement in this deal where they are acquiring stores and facilities at basically below liquidation value. They have little incentive right now to do anything but hire Hilco, Gordon Brothers, Great American, etc. as soon as they take the keys.
I think Kroger has to find ways to grow more slowly so they don't attract this level of attention. C&S could assist with they if they are handed some offloads from Albertsons and "flip" them to Kroger. But I think they continue to grow the way they have, acquiring one local or regional chain at a time.
Obviously Albertsons is going to go in another transaction but C&S is not going to be a buyer as they couldn't possibly scrape together a similar purchase price over $20 Billion. I am not sure who would be a buyer, but I still could see a transaction where Amazon offloads the Whole Foods/Fresh operations entirely in a fire sale transaction and ACI acquires it to bulk up and add shareholder value. I know Just Walk Out didn't work, but I also question if its removal is a way of further disentangling Amazon from those stores to better facilitate an asset sale at the opportune time. I could also see Apollo offering to buy out Cerberus' shares and take the company private. They could also accomplish both an acquisition of Whole Foods/Fresh and taking the combined entity private.
Interestingly I don't believe there is going to be any difference on the political front because this is going to wind up in the hands of the Supreme Court once an injunction is granted (which I see as inevitable, there are too many different courts involved and all it really takes is one). The Supreme Court is going to do one of two things, uphold the injunction or remand it to the previous court (thereby upholding it). I see zero chance of the companies being able to show any compelling reason why they would be imminently harmed by an injunction (neither one would be at risk of insolvency for example even with the dividend deal at ACI). That injunction would force an immediate halt to any of the NDA merger integration planning groups, it would likely void the C&S deal, basically an injunction stops and ceases all merger related activities until the trial is completed. Once the government has an injunction they could drag out proceedings for years and years for dubious reasons which would not be palatable to Cerberus who just wants to cash out.