business news in context, analysis with attitude

Executives for Albertsons, the nation’s second largest grocery company and the chain that yesterday turned down a $9.6 billion acquisition offer, are now saying that the entire company no longer is for sale.

However, the company said would be willing to sell off underperforming divisions.

MNB reported on Thursday that Albertsons had for unknown reasons broken off negotiations with a consortium that included Supervalu, CVS, investment fund Cerberus Capital Management, and real estate firm Kimco Realty. CVS was then reported to be negotiating to buy Albertsons’ Sav-on and Osco drug chains, but apparently bailed out of those discussions as well.

Analysts speculated yesterday that antitrust concerns may have scuttled the sale.

In an interview published this morning by the Idaho Statesman, embattled Albertsons CEO Larry Johnston said that “put simply, we did not receive a bid that we could accept.”

Johnston said that from this point on, “It is business as usual, and we're going to continue operating here in Boise. We will no longer be focusing on the sale of the company. We plan to continue to grow our profitable grocery business, create a more compelling shopping experience and growing our free standing drugstore business,” though he plans to sell off underperforming assets. And Johnston said, the company remains committed to cutting costs and raising productivity levels.

As for his own future, Johnston said: “I am looking forward to continuing to lead this great company. One thing this strategic review has allowed me to do is to develop an even deeper appreciation for this great company and our tremendous team of 240,000 associates across the country. I am so proud of their accomplishments, not only their ability to offer our customers an outstanding shopping experience, but our ongoing commitment to the communities that we serve.”
KC's View:
First of all, give it a little bit of time and there won’t be a helluva lot of difference between the “entire company” and the company’s “underperforming divisions.”

Okay, maybe that’s a little hyperbole. But you get our point.

What would worry us about this if we owned stock in Albertsons or otherwise had our future tied up in the company’s performance is that no matter what the CEO says, management doesn’t seem to have a real commitment to running the company. The only reason it is doing so is that it couldn’t get enough money to sell it.

That’s hardly the same thing.