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Sector Update: Consumer

By: MT Newswires
Posted: 3/7/2014 12:54:00 PM
Referenced Stocks: SWY;SVU;HAWK

Consumer stocks were little changed this afternoon, with shares of consumer staples companies in the S&P 500 rising less than 0.1%. Shares of consumer discretionary firms in the S&P 500 were down less than 0.1%.

In company news, Safeway ( SWY ) shares fell nearly 3% Friday after the grocery chain late Thursday announced a definitive merger agreement with Supervalu's ( SVU ) Albertson's unit in a deal valued at more than $9 billion.

The deal calls on SWY shareholders to receive $40.10 for each share they own, consisting of $32.50 per share in cash and pro-rata distributions worth an estimated $3.65 per share from the sale proceeds of a real-estate development subsidiary, a 49% interest in Mexican retailer Casa Ley SA de CV and other non-core assets.

The planned merger does not alter plans to distribute the remaining 37.8 million shares of Blackhawk Network ( HAWK ) to SWY shareholders with a current value of $3.95 per SWY share. The merger agreement also includes a "go-shop" period, during which SWY can actively solicit alternative proposals over the next 15 days and entering a deal within three weeks. The competing bidder would have to pay a $150 million termination fee to Albertson private equity owner Cerebrus, or $250 million if it strikes a deal beyond the 21-day go-shop period.

SWY shares were down 2.8% at $38.36 each in recent trade, narrowly inching above its $38.15 intra-day low. The stock had risen 12% since Feb. 18 when the company disclosed it was in buyout talks with an unnamed suitor. HAWK shares were up about 4.5% at $26.25 apiece.

In other sector news,

(+) SKUL, (+32.8%) Non-GAAP earnings decline 72% from a year earlier to $0.13 per share but still beats Capital IQ consensus by $0.04. Revenue slides 28% year over year to $72.2 mln, edging out Street estimates by $400,000. Forecasts at least 5% Q1 sales growth compared to analyst expectations for a 5% decline.

(-) GPS , (-0.2%) February sales decline 3.8% from year-ago levels to $929 mln. Same-store sales decline 7%; analysts were looking for a 1.1% gain.