Summary
Since July 26th, the date of the $2.9 billion Supervalu deal announcement, United Natural Foods shares are down 28%.
United Natural Foods' leverage is set to move from 1.15X to 4.7X.
Although the company needs more distribution capacity, the market hates this deal.
An activist could acquire a 5% stake and take their case to the shareholders to break up this deal, resulting in a quick 30% return.
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In the September 17, 2018, Bloomberg Businessweek magazine article (The Most Boring Bull Market. Ever), the author, Chris Nagi, cites:
The number of so called activist investors making demands on public companies swelled past 500 for the first time in the first half of 2018.
So, given the amount of capital that activist hedge fund managers are mandated to put to work, I would argue they have more capital than good ideas to put in motion. Therefore, I am quite surprised that an activist, at least not yet, hasn't acquired a 5% stake in shares of United Natural Foods, Inc. (NASDAQ:UNFI) and then simply stopped the incredibly unpopular Supervalu merger. Since July 26, 2018, the day UNFI announced its intention of spending $2.9 billion to acquire Supervalu (NYSE:SVU) for $32.50 per share including the assumptions of SVU's debt, shares have sharply dropped from $41.18 to $29.71, or down 28% (based on yesterday's close).
