Alberston's Is For Sale

[got cash]

Albertson's Considers Sale of Company
09.02.2005, 09:15 AM

Albertson's Inc., the nation's second-largest supermarket chain, put itself up for sale Friday as the company contends with lagging sales compared to many of its rivals.

The company - which operates about 2,500 stores including Albertson's, Acme, Shaw's, Jewel-Osco and Sav-on Drugs - said it is interested in pursuing "strategic alternatives" to increase shareholder value. Albertson's' board retained Goldman Sachs & Co. and Blackstone Group LP as financial advisers.

Albertson's said it would not comment on developments until its board approves a definitive transaction.

In June, Albertson's reported first-quarter earnings nearly tripled due to an acquisition and the continued recovery of the Southern California market after a major labor dispute. However, analysts said the company's underlying sales with or without the Southern California stores are still not as good as its main competitors.

At the time the earnings were released, Goldman Sachs analyst John Heinbockel said Albertson's continued lagging sales would put increasing pressure on earnings later in the year, despite cost cuts.

The company is recovering from a 4 1/2-month strike of 59,000 supermarket workers in California. The strike ended Feb. 29 when members of the United Food and Commercial Workers union ratified a contract with Albertson's, Safeway Inc. and Kroger Co.

Albertson's shares surged $4.46, or 21.5 percent, to $25.19 in premarket trading.

[sold]

Group to Buy Albertson's in $9.7B Deal


Albertson's Inc., the nation's second biggest traditional grocery store, said Monday it has agreed to sell the company for about $9.7 billion in cash and stock to an investment group including supermarket chain Supervalu Inc. and drugstore chain CVS Corp.


Supervalu, based in Minneapolis, is paying about $6.3 billion in stock and cash and will assume approximately $6.1 billion of Albertson's debt for 1,124 Albertson's stores. The deal makes Supervalu the nation's second-largest supermarket chain after Kroger Co.

CVS of Woonsocket, R.I., is purchasing about 700 stand-alone 700 stand-alone Sav-on and Osco Drugstores and Albertson's ownership interests in the drugstore real estate for about $2.9 billion. The chain now operates more than 5,000 stores.

The other purchasers, led by Cerberus Capital Management L.P., include real estate investment trust Kimco Realty Corp., Schottenstein Stores Corp., Lubert-Adler Partners and Klaff Realty. The Cerberus-led group will acquire stores in Dallas/Ft Worth, Northern California, Florida, the Rocky Mountains and the Southwest, and the group plans to operate the stores under the Albertson's name.

Following the transaction, approximately 65 percent of the new Supervalu will be held by existing Supervalu stockholders, and approximately 35 percent will be held by Albertson's stockholders on a fully diluted basis reflecting options, awards and the settlement of the HITS.

The boards of Supervalu, CVS and Albertson's, as well as the investment committees or equivalents of the Cerberus-led group, have approved the transaction.