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Albertsons grows ambitions for Sprouts: Bloomberg
Posted on Monday, 20 March 2017 12:09
Cerberus Capital-backed grocer Albertsons is contemplating taking private Sprouts Farmers Market, the US fresh, natural and organic foods supermarket currently worth USD 3.01 billion in the stock markets, Bloomberg reported.

Sources familiar with the situation told the news provider while preliminary discussions have taken place they are still at an early stage – meaning there is no guarantee the Arizona-based operator would end up joining a portfolio which includes the Safeway brand.

Cerberus and Sprouts were not immediately available for comment when contacted by Bloomberg, but should a merger go ahead it would be yet another step in the wave of consolidation sweeping through the US grocery sector.

Albertsons has made a series of acquisition in the past decade, which began with the purchase of legacy store operator Albertson’s LLC in 2006 and encompassed adding the Jewel-Osco and Star Market brand names to its portfolio.

The company is one of the largest food and drug retailers in the US, with 2,327 stores across 35 states and the District of Columbia under 19 well-known banners, as of 31st December 2016.

It generated pro forma adjusted earnings before interest, tax, depreciation and amortisation of USD 2.70 billion on net sales of USD 58.70 million in the 12 months ended 28th February 2015, and USD 2.10 billion on USD 45.90 billion in the first three quarters of 2016.

Sprouts Farmers was founded in 2002 and had 256 stores in 14 states as of 23rd February 2017, making it one of the biggest healthy grocery stores selling fresh, natural and organic food in the US, with net sales of USD 4.05 billion in the year to 1st January 2016.

Traditional regional chains are bulking up through mergers and acquisitions in order to gain traction on a market dominated by online retailers like Amazon, superstores such as Wal-Mart and discount operators which include Aldi.

Zephyr, the M&A database published by Bureau van Dijk, shows from the beginning of 2016 to 2017 to date there have been 18 announced or completed deals within the US grocery and supermarket sector.

While these include Albertsons buying 29 of Haggen’s core stores out of bankruptcy, it also comprises private equity houses entering the fray.

Onex took over the Save-A-Lot business from Supervalu for USD 1.37 billion and Apollo acquired Fresh Market for USD 1.36 billion.

© Zephus Ltd