Safeway Rises on Report That West Face Took Stake
Safeway Inc., the second-largest U.S. grocery-store chain, rose after the Globe & Mail reported that activist fund West Face Capital Inc. recently acquired a minority stake in the company.
Safeway advanced 4.9 percent to $20.34 at the close in New York. The shares have dropped 4.6 percent in the past 12 months, compared with a 16 percent gain for the Standard & Poor’s 500 Consumer Staples Index.
West Face, based in Toronto, said investors are ignoring the value of Safeway’s Blackhawk gift-card business and Canadian supermarket business, the newspaper said, citing a letter it obtained.
Net income at Safeway, which announced in January that Chief Executive Officer Steven Burd is retiring this year, dropped in 2011 and was forecast to fall last year, according to data compiled by Bloomberg. In September, the company said it was planning an initial public offering of a minority stake in Blackhawk Network Holdings Inc., which provides prepaid products, such as restaurant gift cards, to retail and grocery stores.
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