Safeway Inc. (NYSE:SWY) announced today that it was creating a poison pill to guard against some unidentified investor. Now it appears we know who that investor is. Regulatory filings posted with the Securities and Exchange Commission today indicate that the activist investment firm Jana Partners LLC has taken a 6.2 percent stake in the grocery store chain.
Shares of Safeway Inc. (NYSE:SWY) climbed as much as 9 percent today after news about the poison pill was revealed as investors anticipated intervention from an activist investor.
Jana Partners’ purchases Safeway shares
The filings indicate that Jana Partners has been gobbling up large quantities of shares of Safeway Inc. (NYSE:SWY) since at least July. The firm snagged roughly half a million shares on Monday alone after buying more than a million shares last week.
According to today’s regulatory filing, Jana Partners bought the shares of Safeway because the firm believes they are undervalued. The firm reported that it “has had and may continue to have discussions with the Issuer’s management regarding a review of strategic alternatives.” Among the strategic alternatives listed by Jana Partners is “a review of the markets” in which Safeway Inc. (NYSE:SWY) operates.
Jana Partners’ plans for Safeway
In other words, the firm might try to talk Safeway into selling some of its stores in some parts of the country. The firm has also apparently been talking with management about returning more capital to shareholders and making changes in corporate structure. Jana Partners specifically names the possibility of transferring Safeway’s stake in Blackhawk Network Holdings, Inc. (NASDAQ:HAWK) to shareholders. The firm also states in its regulatory filing that it wishes to discuss with Safeway Inc. (NYSE:SWY) “increasing transparency” in the company’s communications with investors.
In addition, it states that it might take other steps to “bring about changes to increase shareholder value.”
The poison pill adopted by Safeway today prevents any shareholder from buying more than 10 percent of the company’s outstanding shares, but with just a 6.2 percent stake in the chain, Jana Partners could still buy more.