Re: 🛒 Kroger-Albertsons Merger: National Impact
Posted: March 16th, 2024, 9:14 am
Sankaran hasn't done much growth under his command, the C-suite isn't great itself right now. I can't think of any real growth under Sankaran anyway.ClownLoach wrote: ↑March 16th, 2024, 7:50 amI would expect that Apollo will at the very least force Albertsons to refinance all of their debts with them. Didn't we all read that Albertsons needs to do this in the next few years as they have a big loan coming due? Of course because interest rates are high right now Apollo will be getting paid much more than Albertsons current financiers and if they struggle to pay then they can just foreclose on the whole company and take it over in bankruptcy. Apollo has already sunk their teeth into this company and they're not going to let go. They have too many ways to make a profit here, and it's entirely possible that they might make just as much money with no merger due to the immediate refinancing needs of Albertsons. With those new loans they will also want seats on the board to protect their interests, and those board members will eventually force the C-Suite to be emptied out and replaced with Apollo's people who will do even more to benefit Apollo over Albertsons itself. I don't understand how it's even legal, but if they get enough shares then they will not have any opposition.pseudo3d wrote: ↑March 15th, 2024, 6:56 pmPart of Safeway's spinoffs almost certainly had to do with KKR's 1989 acquisition, RJR Nabisco, which KKR began to slash, including Del Monte Foods, their UK division, and others. Selling Safeway as a public company in 1990 was probably part of this fallout.wnetmacman wrote: ↑March 15th, 2024, 11:56 am
The Dallas division was plagued with a union instability that was threatening the whole company - not just that division. When you combine that with an older and smaller store base containing mostly in-town, non-suburban stores, in the late 80's, it was a recipe for disaster. Adding to this complexity was an owner (KKR) who had no business owning something as large as Safeway, and only wanting what all investors want - ROI.
My point is that during that time Kroger was having issues of its own. If Safeway had played its cards right with a fair bit of luck, it could've been Kroger that might've been bumped off in the late 1980s in Houston. By the time AppleTree announced its sale of the stores in the late 1993, Kroger had put itself back together and secured itself for the future.Kroger was not building Signature stores during the 1987-90 Safeway implosion, though it's fair to say that with the exception of Oklahoma, they have been the largest long-term beneficiary of it all.
The banks owned AppleTree from day one (the AppleTree name came about a year later, with the branding created out of house). They actually didn't keep the facilities (they owned a lot of stuff inside but they were leased from Safeway at a tune of $400k a month), and had to deal with a fairly torturous time including a long strike.part of that debt was most likely from having to pay Safeway to use the name for a couple of years until they figured out their identity - by which point they were in too deeply to pull out of it.
Not really. Kroger loses the least. Unless Kroger has a large termination fee owed to Albertsons, they get to walk away without adding a bunch of debt and still keep their #1/close #2 in their markets. Sure, they don't get NorCal, but if they were really desperate for NorCal representation then it might be worth making some calls to Save Mart. Apollo is in a worse state (they don't get their payday promised from Kroger, nor get to saddle them with debt), and of course Albertsons is still threatened as long as Apollo hangs over them. Unless a new potential owner appears out of the woodwork that would pose less of an issue, or Apollo sells its shares and walks away, the company is in danger.In any event, the Kroger-Albertsons marriage will probably soon be off unless Kroger pays off the judges. They stand to lose the most if it fails.
If Apollo walks away with the $600M termination fee and the "upscale" stores (Haggen, Andronico's, Kings, Balducci's) then they might just have enough to walk away.