Hedge Funds Plan to Seek Higher Price for Safeway
Hedge Funds Holding About 8% of Grocery-Store Chain Plan to Seek Higher Price in Court
Hedge funds holding about 8% of Safeway, which was sold last month for about $7.5 billion, plan to seek a higher price in court for the grocery-store chain, the latest exercise of an increasingly popular legal tactic known as appraisal rights.
Merion Capital LP has the largest position among the funds, people familiar with the matter said. Pennsylvania-based Merion owned 10.5 million shares of Safeway as of Sept. 30, according to a regulatory filing, or more than 4% of the company.
Magnetar Financial LLC, Muirfield Capital Management LLC and Brigade Capital Management LP are among the other funds owning Safeway shares and planning to exercise the rights, some of the people said. All told, holders of 17.7 million shares — worth about $575 million at the buyout price—have notified the company that they plan to seek an appraisal, one of the people said.
The dissenting investors have about four months to file a formal claim. They could also change their mind and accept the buyout price.
Albertsons, controlled by Cerberus Capital Management LP, paid $32.50 a share for Safeway, the country’s second-largest grocery chain by market share. The deal, which was announced last March, closed Jan. 30 after a lengthy antitrust review.
In an appraisal, a judge determines the fair value of a company’s shares at the time of a deal’s closing. Investors also get paid interest on their stakes while the cases are pending.