storewanderer wrote: ↑December 3rd, 2022, 11:41 pm
pseudo3d wrote: ↑December 2nd, 2022, 10:53 pm
Now that Sankaran has testified that Albertsons' finances are good, it would be difficult to smash the company into pieces immediately "for financial reasons" if the merger falls through lest Sankaran gets accused of perjury. And Cerberus' impatience drove them into this mess...no way they'd allow a slow Lampert-style liquidation while maintaining the pretense that the company could be "restored to profitability" by "reshaping the company" or whatever Lampert's excuse was.
Fortunately for Cerberus they have three real options:
1) Dump Sankaran and install someone new with plans to make positive changes and hold onto Albertsons a little while longer; it's essentially a recession-resistant company. The stock may even rise.
2) Work with Kroger and get serious about SpinCo. Develop a comprehensive plan. 650+ stores, include the rights to current brands and facilities. And not forking over all the debt to ensure it withers instantly.
3) Continue shopping Albertsons around to a company that wouldn't create as many problems.
I don't think Sankaran is who came up with the merger with Kroger... has it been announced he will remain with the merged company?
Cerberus and friends control 75% of the shares of the company. Whatever needs to happen that is in the best interest of Cerberus and friends, will happen. They are the group that controls the company. Albertsons is not a typical publicly traded company in that regard; the common stock shareholders have 25% minority interest in the company and basically no say in typical corporate actions like shareholders in a company typically have.
They really just needed to get rid of the bad divisions and let the rest of it go on publicly traded with different shareholders. Cerberus knows how to monetize bad grocery stores (see Albertsons LLC) for their real estate. So do that, get rid of the bad assets, and keep the good ones. The good assets like NorCal and Jewel would post some of the best financial performance in the industry.
Whether the merger lives or dies, Sankaran will probably get his golden parachute either way...unless of course, he gets thrown under the bus by making the acquisition more of a liability than it already is.
Realistically, Sankaran will probably not be charged with perjury even in the worst case scenario and it just results in a lawsuit against Cerberus.
The problem is that they really don't have bad divisions that can be monetized like they used to, and I have to assume that even the worst divisions are at least pulling in marginal business. When you look at the divisions and markets they got rid of under LLC, they had buyers lined up that did not cause a problem in and of themselves. Ross picked up a number of sites (though I'm not sure if they actually closed them because of Ross or if Ross took some that were closed immediately in the wake of the split). In NorCal, they sold those stores to Save Mart, in Florida, they sold most of their stores to Publix (at a deal they couldn't refuse). In the Dallas-Fort Worth division, they sold stores to H-E-B (2007 with the Austin stores and in 2011 with the other three that weren't closed or sold yet). The "Rocky Mountain Division" (what Albertsons had the Denver stores as) was just absorbed into the other divisions but they still had a presence in the area.
At this point in the non-Dallas stores, they don't have a lot of options for selling. The Houston stores are already being squeezed by H-E-B and Kroger, and the independents market that once flourished is no longer. The Denver market can't easily be dealt with either. They DO have options for "Mid-Atlantic" and Shaw's...but obviously not good ones. The only way they could get rid of the stores in one piece would be some sort of joint partnership with C&S Wholesale Grocers, with C&S supplying the stores and taking over the large ACME facility, throwing in their "Grand Union" stores and whatever other stores they still own, and Albertsons holding a stake in the venture.