DOWN TO BUSINESS – Did last week’s mega supermarket deal betrothing No. 4 grocer Albertsons to No. 2 Kroger leave Ahold Delhaize at the altar?
Let’s look at the gauzy-as-a-veil circumstantial evidence.
Rumors over the summer suggested future nuptials between Ahold, which operates Hannaford locally, and Albertsons Cos., parent to Safeway, Acme, Jewel-Osco and other supermarket chains.
The speculation was based on reports that flight trackers put two Albertsons jets at an airport near Ahold’s U.S. headquarters in Massachusetts in early August. That caused a quick pop in stock prices.
Then, just before the Kroger-Albertsons deal was announced, Ahold’s CEO, Frans Muller, told a Belgian newspaper that his company, based in the Netherlands but with a hefty U.S. presence, had its eyes peeled for potential acquisitions.
According to an account of the interview reported by an online retail platform in Antwerp, Muller saw the possibility that food retailers buoyed for a bit by pandemic spending but behind on needed technology investment, might now want to sell.
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In Europe, that would mean having to scout in another country, given Ahold’s dominance in Belgium, the Netherlands and Luxembourg, he was quoted as saying. “In the United States, we can move our operating area a bit further west.”
Ahold is the No. 5 grocer by market share in the U.S., just behind Albertsons, according to the consumer data company Numerator. Ahold’s 2,000 stores, concentrated on the East Coast, also include Food Lion, Stop & Shop and Giant/Giant Co.
Albertsons, based in Idaho, has nearly 2,300 stores across 34 states and the District of Columbia, including Acme markets downstate.
But with word of the Kroger-Albertson engagement, any union of the Ahold and Albertsons families was dashed.
Ohio-based Kroger Co., with 2,700 stores in 35 states and Washington, D.C., under such banners as Ralph’s, King Soopers, Harris Teeter and Kroger, offered $24.6 billion for Albertsons to create a footprint covering most of the country.
Store overlap will be an issue with regulators, though, accounting for the projected long horizon to early 2024 before they wed.
Asked about the deal’s impact, David Schoeder, of merger adviser The Food Partners, passed along an analysis detailing the grocers’ concentration in markets such as Phoenix, Los Angeles, Seattle, Denver and Chicago – where the Federal Trade Commission would be leery of having a combined operator.
Expecting some pushback, the companies said they would spin off a new public company to Albertsons’ shareholders that would be comprised of 100 to 375 “quality,” divested stores to operate as a “new, agile competitor.”
A spokeswoman for Ahold’s U.S. operations declined to expand this week on Muller’s acquisition comments or to discuss the Ahold-Albertsons rumors or Kroger-Albertsons deal.
“We don’t comment on M&A activity of our competitors or market rumors/speculation,” she said by email.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].