Friday, March 12, 2010

SuperValu up 5% on some sort of speculation....(SVU)

Rumors are flying around today about grocery concern SuperValu (SVU), and that it might be the target of a buyout.  While I'm doubtful, trading volume is enormous today, with 13 million shares traded versus a 3 month average of 4.1million...

As for a buyout, I for one don't see how the numbers work out, at least for a private equity debt-financed bid.  Even taking their maximum interest coverage of the last 5 years leaves little room to add more debt service to this cash stream.

The company's fixed rate debt schedule shows a lot of principal payments this year and next, that will play a large part in a buyout.

Copyright 2010 AlphaNinja

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