NEW YORK (AP) — Jefferies & Co. cut its rating on Winn-Dixie Stores Tuesday, saying that a competing bid is unlikely a day after Bi-Lo LLC said it would acquire the Southern grocer in a deal valued at $560 million.
Analyst Scott Mushkin said that Winn-Dixie's stockholders will probably approve the buyout because it is a significant premium to the company's Friday closing stock price.
While Mushkin said that Delhaize would be the most probable company to submit a competing offer because of its supermarket presence in the Southeast, he does not think such a bid will materialize because Delhaize is currently dealing with its own internal issues, which include a turnaround of its Food Lion chain.
The transaction gives each Winn-Dixie stockholder $9.50 per share in cash, a 75 percent premium to the Jacksonville, Fla. company's Friday closing stock price. At that price, the deal would be valued at slightly more than $530 million.
The transaction will create a huge grocery operator in the South, with the combined company having about 690 stores and 63,000 workers in eight states. The buyout, which will take Winn-Dixie Stores Inc. private, is expected to close in the next 60 to 120 days.
Mushkin lowered Winn-Dixie's rating to "Hold" from "Buy" and maintained a $9.50 price target. A Winn-Dixie representative could not be immediately reached for comment.