storewanderer wrote: ↑February 1st, 2023, 11:56 pm
I don't think there will be a "SpinCo." I think Save Mart IS going to be the "SpinCo."
The people running Haggen did not have experience running large grocery chains across multiple regions. That was a situation where management was not the right management and the wholesaler situation especially in SoCal with Unified was a total fiasco.
Save Mart is in a better situation than Haggen but it doesn't matter. A regular airborne bomb may do less damage than a nuke but that isn't going to matter when you're in the epicenter--you're dead anyway. As-is Save Mart has about 200 stores but taking on any substantial number of stores is going to be nothing less than unqualified disaster.
Let's go over the facts here.
- Kroger has been extremely vague about the prospects of the divested stores or the reorganization of stores, as a result we know almost nothing about SpinCo or the organizational structure of Kroger post-merger. There is no guarantee that they will sell off brands or facilities.
- Historically, selling off divisions wholesale is a risky prospect. The divisions that Safeway sold off in the 1980s were destroyed under the fact that their acquiring companies collapsed under the weight of debt or the stores that were acquired. The one exception was Vons and the SoCal division, and that came with the prospect of Safeway taking "insurance" with a third of the company and right of first of refusal. They cashed on this insurance policy about a decade later, bagging Vons and including many of those stores they sold to them.
- If you look at more recent history, none of the Albertsons divisions from 2001 to 2008 were sold off in their entirety except for one. When Larry started pulling out of markets and dismantling the companies, the San Antonio division was closed (some stores sold to H-E-B but not many), the the Houston division was closed (stores sold to Kroger, Randalls, and others), and the Mid-South division was closed (Schnucks, Publix). Going further into the breakup of the company, all of the stores were sold off were in chunks of no more than 50 (the largest single acquisition was about 49 stores with Publix in 2008, and even then they didn't take on the Florida Division) and no single division sold off in its entirety. The one exception to this was selling off the entire NorCal division to Save Mart at 130 stores, which nearly doubled the size of the company but produced some very substantial growing pains that they have been just able to overcome, and the number of Save Mart stores today is less than when they acquired Albertsons NorCal (204 vs. 254 at peak).
- The divisions that would be affected compose of the Northwest United States, Southwest, SoCal, Chicagoland and Texas/Louisiana. (Washington DC and Denver may be irrelevant, just as they were in the Safeway/ABS merger).
- None of these are in Save Mart's territory and entering new territory via acquisitions is going to be harder than normal. Compounding this is that these will be castoff stores. Recall in the 1999 divestments, the stores that tried to enter new territories with their acquisitions (Ralphs, Raley's) failed.
- If Save Mart tries to pick up 200 stores in areas that they aren't native to and double the size of their business, they will most likely fail. They will likely will not be able to supply all of them with their own facilities. With Albertsons NorCal they not only got the distribution center but the prime locations of that division as it included everything.
- It is unlikely Save Mart is interested in the Southwest stores and even less interested in the Texas/Louisiana/Chicagoland stores (not that they could afford it).