Would Albertsons and Whole Foods make a good match?
Amazon.com reportedly had internal discussions about a bid for Whole Foods Market before deciding to take a pass. Kroger has also been mentioned as suitable suitor for the organic and natural foods grocery chain. Now, comes a report that Albertsons Cos. is mulling a run at Whole Foods.
The Financial Times reports that Cerberus Capital Management, the private equity group that controls Albertsons, has begun preliminary discussions with bankers about making a bid for Whole Foods.
The report follows revelations that the Jana Partners hedge fund, which owns 8.8 percent of Whole Foods’ stock, has teamed up with other shareholders to seek four seats on the chain’s board, push for more aggressive action on its turnaround plan, and to explore other options including a possible sale of the company.
Albertsons, which operates conventional supermarket chains under its own banner and others, including Safeway, Vons, Jewel-Osco, Shaw’s and Star Market, was reported by Bloomberg last month to have engaged in preliminary discussions with Sprouts Farmers Market about a possible acquisition of that organic grocery chain. While those talks did not lead to a deal, the experience hasn’t appeared to have put Albertsons off looking for another.
Perhaps a major acquisition would position Albertsons to seek an initial public offering of its stock. The company, which closed on its acquisition of Safeway in 2015, explored pursuing an initial public offering five months later but opted not to move ahead based on what management saw as unfavorable market conditions at the time.
Whole Foods has taken numerous steps to turn its business around. The chain has begun working with the data analytics firm, Dunnhumby, to better understand its shoppers. Whole Foods has also tightened up its pricing, launched a loyalty program, created a national advertising campaign, and debuted a new competitively-priced format under the 365 by Whole Foods Market banner.
- Albertsons explores bid for high-end grocer Whole Foods – The Financial Times
- Whole Foods Rallies on Report That Albertsons Is Mulling Bid – Bloomberg
- Would Whole Foods do better under new ownership? – RetailWire
- Albertsons Said to Weigh Merger With Organic Grocer Sprouts – Bloomberg
- Will Albertsons sink or swim following its IPO? – RetailWire
DISCUSSION QUESTIONS: Would Albertsons’ approach to running its acquisitions work well for Whole Foods? What do you see as the biggest challenges and opportunities for the companies should a merger take place?