Albertsons announces strategic review of company

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Re: Albertsons announces strategic review of company

Post by marketreportblog »

I've been reminded of the time that Ahold bought Pathmark in 1999, and the time that Ahold Delhaize bought King Kullen in 2019.
https://www.supermarketnews.com/archive ... 75-billion
https://farmingdale-observer.com/2019/0 ... -delhaize/
Obviously, neither one of these deals went through, but were both announced with certainty as we see here. In other words, Ahold Delhaize doesn't exactly have the greatest track record on following through with acquisitions. That said, an Albertsons deal might be major enough that they don't let it fall through.

The east coast would pose significant problems for integration between Ahold Delhaize and Albertsons, as storewanderer says. Giant and Safeway overlap in the mid-Atlantic region, the other Giant and ACME overlap in the Philadelphia area, Stop & Shop and Shaw's/Star overlap in the Boston area, and Hannaford and Shaw's overlap in northern New England. At least as far as I could think of, I don't see too many problems with ACME and Stop & Shop coexisting in NJ. So here's a thought, if we're talking about spinoffs: would Safeway East, ACME/Kings, and Shaw's/Star be spun off into a new company? It would keep a big part of the Albertsons portfolio intact and eliminate any potential overlap problems in the northeast, while keeping the established AD banners intact. The only problem I can see with that is where the Albertsons chains are stronger than the AD chains -- for instance, where Star Market and Stop & Shop compete, Star Market frequently has newer, nicer, larger, and apparently more high-volume stores. But it's a possibility that they'd want to keep the Albertsons brands intact and just separate them out from the merged company.
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Re: Albertsons announces strategic review of company

Post by arizonaguy »

marketreportblog wrote: August 9th, 2022, 6:36 am I've been reminded of the time that Ahold bought Pathmark in 1999, and the time that Ahold Delhaize bought King Kullen in 2019.
https://www.supermarketnews.com/archive ... 75-billion
https://farmingdale-observer.com/2019/0 ... -delhaize/
Obviously, neither one of these deals went through, but were both announced with certainty as we see here. In other words, Ahold Delhaize doesn't exactly have the greatest track record on following through with acquisitions. That said, an Albertsons deal might be major enough that they don't let it fall through.

The east coast would pose significant problems for integration between Ahold Delhaize and Albertsons, as storewanderer says. Giant and Safeway overlap in the mid-Atlantic region, the other Giant and ACME overlap in the Philadelphia area, Stop & Shop and Shaw's/Star overlap in the Boston area, and Hannaford and Shaw's overlap in northern New England. At least as far as I could think of, I don't see too many problems with ACME and Stop & Shop coexisting in NJ. So here's a thought, if we're talking about spinoffs: would Safeway East, ACME/Kings, and Shaw's/Star be spun off into a new company? It would keep a big part of the Albertsons portfolio intact and eliminate any potential overlap problems in the northeast, while keeping the established AD banners intact. The only problem I can see with that is where the Albertsons chains are stronger than the AD chains -- for instance, where Star Market and Stop & Shop compete, Star Market frequently has newer, nicer, larger, and apparently more high-volume stores. But it's a possibility that they'd want to keep the Albertsons brands intact and just separate them out from the merged company.
Shaw's / Star Market, Safeway - East, and ACME are going to be finding new homes. Stop & Shop just has such a critical mass over Shaw's / Star Market that I don't see this division being kept.

As far as potential buyers. I'd imagine Kroger and Publix might be interested in some locations (if not whole chains). We also can't count out Weis, Wakefern, etc.

If the Albertsons east coast stores are divested, I don't see any reason Food Lion cannot remain part of the company (and I still see the potential that the Food Lion concept (maybe not name) expands to other Albertsons divisions).

I don't see Albertsons buying low preforming divisions of any company anymore. I think it's been mentioned that Cerberus wants out of its investment in Albertsons and they'd need to pump money in if Albertsons was going to be an acquirer.
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Re: Albertsons announces strategic review of company

Post by pseudo3d »

The thing with an Ahold Delhaize/Albertsons merger is that there's very little benefit to either company. Royal Ahold and Delhaize weren't merged in the U.S. for their benefits, it was all the overseas portions where it counted.

When the Safeway/Albertsons merger happened, Albertsons got an infrastructure (distribution network, store brands, back office support, etc.) that it desperately wanted after SuperValu had stripped it off, as well as re-entering a number of markets that it had previously exited (NorCal, Houston, Austin), and some it never had (Washington DC, Hawaii, Alaska). Very little of Safeway was lost (and in some ways became the surviving company). The divestments were stretched along the West Coast but both brands continued in all areas.

In comparison, Ahold Delhaize gets a bunch of new markets and brands, maybe with the manufacturing arm of Safeway, but the overlap means that the Mid-Atlantic and Shaw's divisions, which have seen lots of money poured into them, basically scrapped. Compounding this is that while Ahold Delhaize runs a pretty tight ship with its brands (Food Lion excluded), at least half of the markets are fixer-upper markets.

It would make more sense from a logistics sense for an Ahold Delhaize/Kroger since Kroger's divisions are overall in better shape and almost no overlap in the Northeast except for maybe a few Harris Teeter stores.
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Re: Albertsons announces strategic review of company

Post by mjhale »

I'm trying to figure out how an Ahold/Delhaize-Albertsons merger, whoever buys whom, benefits anyone other than the companies themselves. It seems like a plan to get Cerberus its money back on the Albertsons deal they were involved in. As for the actual operation of the stores, Albertsons and Ahold/Delhaize are the major traditional grocers in DC, Baltimore, Philly and Boston. At least in NJ/NY you have ShopRite as the strong player to provide some competition to Albertsons and Ahold/Delhaize. Also in the DC market Harris Teeter has enough stores that they provide an alternative in a good number of areas. Beyond that you'll end up with one huge grocer and a bunch of cast offs that may or may not be viable as ongoing grocery operations. Look at the Haggen mess and also the cast off Food Lion stores from the Ahold/Delhaize merger that went to SuperValu. With the exception of a handful of stores that ironically ended up back with Ahold they are all closed. Weis has also closed some of the stores it picked up. Sure Kroger and Publix might want some stores here and there. However I'm looking at this thinking the investors and stock holders will get their due but consumers with end up with less choice as we reduce even more the amount of grocery chains in this country. Are we headed to a world of Kroger, AlbertsonsAholdDehaize, Publix and Walmart as our only large scale grocery chains? That's a depressing thought in my mind.
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Re: Albertsons announces strategic review of company

Post by storewanderer »

Kroger strikes me as a way better merger partner for Ahold's East Coast chains (the strong chains- the two Giants and to a lesser degree Hannaford; Stop N Shop strikes me as weaker but I guess they have some strong points somewhere). Those chains are much more similar to Kroger's typical operation (higher volume, lower pricing). Food Lion is absolutely not a fit for Kroger, and there would be some overlap I think (then again with how low volume most Food Lions are, maybe nobody would care).

The worst possible outcome here is somehow Albertsons/Safeway is the surviving control chain and those Ahold East stores (the two Giants, Hannaford, and Stop N Shop) get moved into the Albertsons/Safeway ecosystem, merchandising, promotion strategy, and pricing. That would be an absolutely terrible thing for consumers. I won't even talk about what would happen if Food Lion got moved into the Safeway ecosystem of marginal stores and terrible pricing because it would run off the few customers Food Lion has left.

Frankly this is a merger I hope does not happen. I see too big of a mess back east. I also fail to see what benefit it brings to the table out west.

I guess I'm a little sour at Safeway. More price increases every time I go in. Tonight- a 12oz can of Signature Evaporated Milk is now 3.29 (Kroger brand one at Smiths is 1.25 and the private labels at Wal Mart and WinCo are both around 1.00). Just cannot believe this pricing. This Safeway/Albertsons chain clearly does not plan to be around for the long haul with how they have their pricing set. They are doing something to make their numbers and margins look really, really good right now...
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Re: Albertsons announces strategic review of company

Post by retailfanmitchell019 »

storewanderer wrote: August 9th, 2022, 10:08 pm Kroger strikes me as a way better merger partner for Ahold's East Coast chains (the strong chains- the two Giants and to a lesser degree Hannaford; Stop N Shop strikes me as weaker but I guess they have some strong points somewhere). Those chains are much more similar to Kroger's typical operation (higher volume, lower pricing). Food Lion is absolutely not a fit for Kroger, and there would be some overlap I think (then again with how low volume most Food Lions are, maybe nobody would care).

The worst possible outcome here is somehow Albertsons/Safeway is the surviving control chain and those Ahold East stores (the two Giants, Hannaford, and Stop N Shop) get moved into the Albertsons/Safeway ecosystem, merchandising, promotion strategy, and pricing. That would be an absolutely terrible thing for consumers. I won't even talk about what would happen if Food Lion got moved into the Safeway ecosystem of marginal stores and terrible pricing because it would run off the few customers Food Lion has left.

Frankly this is a merger I hope does not happen. I see too big of a mess back east. I also fail to see what benefit it brings to the table out west.
Kroger did buy some Hannaford stores in Virginia (Richmond/Hampton Roads) when they merged with Food Lion over 20 years ago. Hannaford had some weird expansion into the Carolinas and Virginia back then. I think Lowes Foods bought the Carolina stores.
Hannaford was partially owned by Sobeys at one time. Yes, Sobeys.
I think an Ahold deal would be better for Kroger, as there is little overlap (mostly Food Lion). An Albertsons/Ahold deal would require massive amounts of divestitures in the DC metro, Philadelphia metro, and most of New England (sans Connecticut and Western MA). I honestly think the FTC would block this, learning from the Haggen calamity. As for Food Lion? They could be spun off to an investment firm, or maybe Amazon.
Without naming names, maybe a foreign retailer could buy a large stake in Albertsons.
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Re: Albertsons announces strategic review of company

Post by jamcool »

There isn't any foreign company big enough to buy Albertsons. Too much been here done that for Tesco. Loblaws and Empire are too busy in Canada.
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Re: Albertsons announces strategic review of company

Post by pseudo3d »

Even if it wasn't a total merger, what do the two companies have to offer? Albertsons has several good divisions and some less-good divisions. The Mid-Atlantic Division would be the one most affected by an Ahold Delhaize merger, but there have been a lot of resources poured into it, and it would look bad on Albertsons part if they sold it. Pre-merger Royal Ahold was very selective in getting rid of less productive divisions, hence their dumping of BI-LO/Bruno's in 2005 and Tops in 2006. Meanwhile, pre-merger Delhaize didn't have much going for it. Food Lion and...Sweetbay.

On the incredibly unlikely chance that Ahold Delhaize is dumping its U.S. operations and Albertsons showed up to kick some tires, most of their stores overlap with their operations anyway, except for parts of Giant-PA and of course Food Lion.
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Re: Albertsons announces strategic review of company

Post by norcalriteaidclerk »

Maybe it's just me,but the ACI Atlantic seaboard operations may be lagging compared to those of ahold Delhaize, which could factor in antitrust reviews should they do merge.If they do merge, hopefully the post-merger ahold Delhaize USA headquarters would either be in Pleasanton or New England rather than Boise.

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Re: Albertsons announces strategic review of company

Post by pseudo3d »

norcalriteaidclerk wrote: August 12th, 2022, 7:52 pm Maybe it's just me,but the ACI Atlantic seaboard operations may be lagging compared to those of ahold Delhaize, which could factor in antitrust reviews should they do merge.If they do merge, hopefully the post-merger ahold Delhaize USA headquarters would either be in Pleasanton or New England rather than Boise.

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They are definitely lagging. In pretty much every market, Albertsons' brand is evenly matched or defeated by Ahold Delhaize's brand.

If they are going to try to find a bigger fish, they can at least try a chain that doesn't have overlap in every major market. But really, I hope this doesn't go through, because it almost certainly means that Albertsons/Safeway will be leading the ship and compromising the Ahold Delhaize chains. My personal wish is that Cerberus hands over the reigns to Lone Star Funds, merging in SEG, but...
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