Published reports say that Kroger, the largest grocery chain in the US, has submitted a bid to acquire all of Albertsons, which announced recently that it would entertain bids for all or parts of the company.
Analysts suggest that Albertsons is likely to fetch as much as $10 billion, plus $6 billion in debt, if it is sold.
There apparently are three other bidders, including three consortiums of investment groups, including one led by Kohlberg Kravis Roberts, another by Thomas H. Lee Partners, and the third by Yucaipa Cos., which recently spent $150 million for a stake in Pathmark Stores.
The name of the fifth bidder was not made public.
If Kroger were to be successful in its acquisition of Albertsons, it would give Kroger a fleet of stores in both the northeast US and Florida, where it has virtually no presence at this point. Some press reports suggested that the combination of Kroger and Albertsons would give the combined company sales almost as big as the grocery sales generated by Wal-Mart…though these calculations do not take into account the likelihood that Kroger would have to divest stores in a number of markets to satisfy federal antitrust regulations.
Analysts suggest that Albertsons is likely to fetch as much as $10 billion, plus $6 billion in debt, if it is sold.
There apparently are three other bidders, including three consortiums of investment groups, including one led by Kohlberg Kravis Roberts, another by Thomas H. Lee Partners, and the third by Yucaipa Cos., which recently spent $150 million for a stake in Pathmark Stores.
The name of the fifth bidder was not made public.
If Kroger were to be successful in its acquisition of Albertsons, it would give Kroger a fleet of stores in both the northeast US and Florida, where it has virtually no presence at this point. Some press reports suggested that the combination of Kroger and Albertsons would give the combined company sales almost as big as the grocery sales generated by Wal-Mart…though these calculations do not take into account the likelihood that Kroger would have to divest stores in a number of markets to satisfy federal antitrust regulations.
- KC's View:
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We suppose that it also is possible that Kroger could be acting as a stalking horse…making a bid for Albertsons with no real expectation that it could buy the company, but looking to get insider information about its operations and financial status.
The problem is that, as many of us have commented, Albertsons is the poster child for missteps in the grocery business. Its prices aren’t low enough to compete with discounters, and its offering isn’t differentiated enough to compete with anyone else. And, it seems to be run by a CEO who is tone deaf when it comes to marketing and merchandising, the DNA of retailing.
Whoever buys Albertsons is going to have a lot of work to do. And repairing relationships with shoppers in many of its markets won’t be just job one. It’ll also be job two, three, four, five and so on.
