It has only been a month since Albertsons’ controlling company Cerberus Capital Management let it be known their intentions to buy Sprouts Farmers Market but it seems the firm is already eyeing another grocery chain of similar reputation.
Yes, Cerberus Capital Management has, reportedly, made a bid for Whole Foods.
Whole Foods, of course, is known for gorgeous, high-quality, organic produce and its equally high prices. Sprouts, on the other hand, offers similar organic products but at more competitive prices. Should Albertsons acquire either of these chains, they will be adding to their 2,200 national chains across 35 states and the District of Colombia. The high prices, though, have suffered the company a bit, losing major ground to minor competitors who have been able to take more aggressive strategies (like offering home delivery).
Obviously, the Boise, ID-based Albertsons grocery chain is one of the largest grocers in the United States. Whole Foods was founded in Austin, TX, in 1978 and currently has about 440 stores in America (with another dozen or so in Canada and the United Kingdom), but the company is planning to close at least nine this month. And this is all despite posting a $5 billion profit in the first fiscal quarter of this year. Albertsons also owns all of the Safeway, Shaw’s, and Jewel-Osco supermarket chains.
Now, Whole Foods is feeling some internal pressure after minority stake holder (only about 9 percent) Jana Partners has been pushing for faster improvements in earnings potential (or in a sale). Indeed, the company’s comparable-store sales have not performed well against the more conventional retailers in the market, especially as these traditional retailers begin to offer more natural and organic foods to meet consumer demand.
On the other side of this, Albertsons has been pushing to go public for the last two years and has been looking to find a more profitable means to survive the highly competitive supermarket industry. And, actually, just last year Amazon had even explored a takeover of Whole Foods; so this might be just the right time in history for Albertsons to swoop in on this sale.
Neither Whole Foods nor Cerberus Capital Management have commented on the news.