However, some of you may be concerned to hear that Albertson's is in play. They have, over the past few weeks, put themselves up for sale. Sort of. They are looking to be acquired by a large international firm and are hoping to get inquiries.
I guess it is working. Tesco, Britains largest grocery comapny, has sent an advance team to do due diligence prior to formulating an offer. Other foreign firms include Carrefour from France and Delhaize from Belgium. US firms have shown interest too. According to Supermarket News, the reports suggest that a deal may be inked by Thanksgiving. The five reported to be submitting bids are: Kohlberg Kravis Roberts & Co., New York; Apollo Advisors, Purchase, N.Y.; Bain Capital, New York; Thomas H. Lee Partners, Boston; and Carlyle Group, Washington, D.C. Many of the firms have previous experience in the supermarket business. It is suggested that bids were accepted last Monday. Goldman Sachs and Blackstone Group, advisers to Albertsons, are expected to work with firms before beginning due diligence. Anonymous sources cited the by the news reports, and in-line with Supermarket News analyst interviews, say the equity firms may take Albertsons private following a purchase.
The least favorite of the five is KKR. They are the firm that purchased Philip Morris years ago and blew it to pieces. Many of you may not know that Philip Morris was once the largest food company in America. KKR bouth them and Nabisco, put them together, took out a boat load of money and broke the company apart. Ugh.
But... back to Albertson's. My concern for this isn;t really about Albertsons. It's about a small retailer Albertson's bought this year. Bristol Farms. Bristol is my FAVORITE grocery store in California. They are the closest thing to Central Market here in SoCal. They have high end products and a devotion to quality. The best of everything in the grocery arena. They also have a great catering section and an in house cafe.
I wrote to the president of Bristol, Kevin Davis, earlier this year begging them to build a store in our area, as I currently drive and hour and a half to shop in their closest store to me. He said beacuse of distribution channels they would not be expanding to our area. Then a few short week later I saw the news that Albertson's had purchased them. Gloom and doom. I knew it wouldn't last. One of their VPs assured me that nothing would change. Albertson's was looking to diversify and Bristol was a good fit. Now Albertson's is over extended and looking for a buyer. I can only hope the purchasing firm does take it private. There still may be hope for Bristol in all of this. The thing I am most curious about is whether or not Bristol will stay part of this deal. Will they separate it out and spin it somewhere else? Bristol is too small a firm to take too much meandering and the assurances of Bristol that all will be well is definitely in question at this point.
UPDATE: A Reuters story this morning mentions this interesting factoid:
"Boise, Idaho-based Albertsons says it owns 60 percent of its stores, making it an attractive real estate play for a financial buyer who could sell the assets and lease back the real estate, using the cash to pay down debt used to finance deal."
Also, CVS is showing signs of interest because Albertson's own SavOn and OscoDrugs (which just ahppen to be the old American Stores companies sold off by Sam Skaggs in the late eighties.)
KKR will really take the lead on this considering the real estate holdings involved. Also, if you're looking for a flyer in stocks ABS (albertsons) is currently at $25 and change. It is expected that if this deal goes through the price could climb as high as $33.70 a share. I'm not saying go buy the stock by any means, but if you white collar gamble, this just might interest you for a short term gain. (/turns off old broker brain)
Update2: Terry Leahy, Tesco's chief operating officer, stated this morning that Tesco will not be bidding on Albertson's.
