Albertsons Companies, formed from the 2015 merger of the existing Albertsons business with rival Safeway, is the second largest traditional supermarket group in the US (behind Kroger) and #3 groceries retailer (behind Walmart). It oversees an extensive collection of different regional supermarket banners. Albertsons and Safeway get top billing, but the collection also includes Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Carr's and others. The current group was formed from a series of complicated deals engineered by private equity fund Cerberus Capital Management, which is also the biggest shareholder in Albertsons' previous owner, the discount groceries group Supervalu. In summer 2015, Cerberus announced plans for an IPO of Albertsons Companies' stock. That plan was quietly abandoned a year later. An alternative route to a listing presented itself in 2018. Albertsons is to merge into quoted pharmacy group Rite Aid in a deal that will create a group with revenues of over $80bn.
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Adbrands Weekly Update 18th Apr 2018: Tax reforms allowed privately owned US supermarket Albertsons to claw a net profit for its year to Feb 2018, despite a 1% decline in same-store sales. Net income came in at $46m, helped by a one-off gain of $964m. For the previous year, the group reported a $373m net loss. Revenues edged up only marginally to just under $60bn. A key element in Albertsons' future plans is the planned merger into publicly quoted Rite-Aid. The merged company would operate about 4,900 stores - including more than 4,300 pharmacies and over 300 retail health clinics - and generate pro forma combined sales of $83 billion. All it needs is approval from Rite-Aid's shareholders, who are due to vote in July this year. Rite-Aid's board has already given its firm support, but some shareholders believe the proposed deal undervalues their group and are wary of exposure to the hard-pressed grocery sector. A green light may be no sure thing.
Adbrands Weekly Update 22nd Feb 2018: America's #3 food retailer Albertsons - owner of a collection of regional banners including Safeway, Vons, Jewel-Osco, Shaw's and others - has agreed to acquire the rump of the Rite-Aid pharmacy group. A little under half of the Rite Aid estate is already being acquired by larger rival Walgreens Boots Alliance. The merger of Albertsons with the remainder of Rite Aid will create a group with sales of around $83bn and some 4,900 locations nationally. Most Albertsons outlets already have an instore pharmacy; these adopt the Rite Aid brand, and the company will also continue to operate stand-alone pharmacies under the Rite Aid name. The combined business will also retain Rite Aid's public listing. Private equity-owned Albertsons has been considering its own IPO for several years; this new merger offers a far more attractive route to market. Rite Aid's existing shareholders are expected to end up with around 29% of the merged group; Albertsons' owners, led by Cerberus Capital, will hold the remainder of shares. Rite Aid's John Standley will be CEO of the combined business; Albertsons' Bob Miller will be chairman.
Adbrands Weekly Update 27th Apr 2017: Privately owned supermarket group Albertsons is weighing up a bid for upscale grocer Whole Foods Market. Albertsons is the third largest food retailer in the US following its takeover of Safeway in 2015, but it still lags well behind leaders Walmart and Kroger. A deal for Whole Foods would narrow that gap a little, and also widen Albertsons' exposure to high-end customers, but could prove quite a stretch financially. A successful offer would probably need to be in the region of $15bn, around two-thirds more than Albertsons paid for Safeway. Whole Foods reported record revenues in 2016 of $15.7bn, but profits have been under intense pressure from other bricks and mortar groups as well as online competitors like Amazon. It is currently the 10th largest food retailer in the US.
Adbrands Weekly Update 16th Jul 2015: There's another big IPO on the way. US supermarket giant Albertson's Companies, formed from the merger of Albertsons and Safeway earlier this year, is to float part of its equity later this year in what is likely to represent a big payout for private equity owner Cerberus Capital Management. It is the #2 traditional supermarket group in the US after Kroger, with 2,200 stores in 33 states.
Adbrands Weekly Update 13th Mar 2014: Safeway and Albertsons, two of America's biggest traditional supermarket groups, are to merge under private equity ownership, forming a stronger rival to leading group Kroger and discounters Walmart and Target. Albertsons is already owned by an investor group led by private equity giant Cerebrus. This has agreed to acquire larger rival Safeway for around $9bn, aligning Albertsons, Safeway and their subsidiary banners under a single management team. Albertsons' Bob Miller becomes executive chairman of the combined group, with Safeway's Robert Edwards as president & CEO. In total the two chains operate around 2,400 stores nationally, 27 distribution facilities and 20 manufacturing plants. Safeway had sales of just over $36bn in 2013 to Albertsons' $23bn. Cerberus is also the biggest shareholder in Albertsons' former owner, the value supermarket chain and wholesaler Supervalu. The announcement could prompt rival offers: Safeway has negotiated a "go shop" clause, allowing it a limited window in which it can solicit higher bids from another buyer. However, under any such competing deal, it would have to pay Cerberus a substantial termination fee of between $150m and $250m.
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