Save Mart adds Bob Miller to Board

[storewanderer]

I had been expecting this for a few months.

It is very clear now the vehicle of Save Mart is to be taking on divested stores from this Albertsons and Kroger merger.

Take what was done with Albertsons LLC in 2008 through the Supervalu then Safeway purchase, the IPO, rinse, repeat.

Would not be surprised to see a similar thing play out here where Kroger screws up like Supervalu did and ends up selling stores for a fraction of what they paid either.

https://storebrands.com/save-mart-compa ... -directors

[norcalriteaidclerk]

Maybe RAD can appoint this one time CEO of theirs to fill the bod vacancy created by the departure of 'the former gal' and try to undo a decent chunk of the damage she did.

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[pseudo3d]

I had been expecting this for a few months.

It is very clear now the vehicle of Save Mart is to be taking on divested stores from this Albertsons and Kroger merger.

Take what was done with Albertsons LLC in 2008 through the Supervalu then Safeway purchase, the IPO, rinse, repeat.

Would not be surprised to see a similar thing play out here where Kroger screws up like Supervalu did and ends up selling stores for a fraction of what they paid either.

https://storebrands.com/save-mart-compa ... -directors

Great, so Save Mart gets to play the part of Haggen in this potential disaster.

If I recall right, they had enough trouble taking on the NorCal division of Albertsons, and that was what, 80 stores?

I'd like to pick his brain on why he went and joined Save Mart; someone at Albertsons did him dirty.

[retailfanmitchell019]

Great, so Save Mart gets to play the part of Haggen in this potential disaster.

And that's why I think the merger won't go through- the Feds will re-familiarize themselves with the Haggen disaster.
I expect the Biden Feds are going to get tough, and view this deal as a merger between two big union shops. That's how Obama's FTC viewed it during the Albertsons/Safeway merger 8 years ago. They wanted the stores divested to a union operator to prevent a monopoly of union operators. That operator was Haggen, and it failed.
https://www.wsj.com/articles/bidens-reg ... 1660555801
Haggen then was owned by Comvest Partners, a real estate firm. I can imagine Comvest just bought the stores to carve up real estate. Sounds like something Fast Eddie would do...

Roth's, a small Oregon chain, has been doing TV ads lately, to prepare for divestitures from Albertsons/Kroger. They are owned by Jim Pattison Group of Canada (owner of Save-on-Foods).
Coincidentally, Bob Miller is on the Jim Pattison board of directors. I expect Jim Pattison Group to get involved in this- they have more cash than Save Mart. They probably acquired Roth's to get a foothold in the US to prepare for this merger. I wouldn't be surprised if Save Mart is in bed with Jim Pattison Group for these divestitures. Jim Pattison could buy a stake in Save Mart, or Kingswood could invest in Jim Pattison.

[HCal]

I don't really understand this. Kroger and Albertsons have said that they are going to spin off the divested stores into a new company called Spinco for now. They have said nothing about selling stores to existing businesses.

With the Albertsons-Safeway merger, they had to sell some stores to other businesses because Haggen didn't want, or couldn't take, all of them. But Spinco will be able to absorb any number of stores, so what is the point of dragging Save Mart into this? Perhaps Save Mart will do something with Spinco afterwards, but that shouldn't be their concern at this stage.

Something fishy is going on here. The more this stuff happens, the more I think the merger absolutely needs to be blocked.

[ClownLoach]

There is zero chance stores are allowed to go directly to a SpinCo organization without being offered up for sale first to satisfy the regulators. They will want to find a way to basically make it a union operator only auction, but there definitely are going to be bids taken before a spin occurs. This is another reason why when I see these fantasy lists that 2/3rds of the stores in a whole region will "go to SpinCo" I laugh because it just doesn't connect to reality. Same reason why Zip Codes are not valid anymore because the population densities are so out of whack. They are going to make sure the stores that they really would like to see closed if they controlled the destiny of every site will be placed into SpinCo, which should be renamed TitaniCo or maybe HindenbergCo because it will be a spectacular disaster that gets liquidated within months. They'll only be able to divest Albertsons Cos properties up front before the merger closes, but then I expect to see any unwanted or problematic Kroger owned store jettisoned to SpinCo after the close (these ones will not be available for sale to other companies as the merger will already be done). The whole divestiture process is designed by the government to sell the stores not spin them off. It is absolutely in their best interest that any store they really don't want goes into SpinCo...

Okay now to the subject of the thread. Bob Miller going to Save Mart really cements the hypothesis that they will seek PE funding to buy everything they can get their hands on all the way south through San Diego and then bring the 20+ year old Lucky debacle home to roost by rebranding everything they buy as Lucky. I am firmly convinced that as part of making sure SpinCo fails Kroger will not want to let go of any banner name. They will claim the value of these brand assets are too high and were essential parts of the merger (even if they proceed to hang a Kroger sign on every box two seconds after the deal closes). That way when the SpinCo store becomes Kaggen or Maggen or some other name nobody has ever seen (get it) customers abandon it in droves. I now wonder if they are going to line up and bid on every last store proposed to divest and then aggressively relaunch the Lucky brand in SoCal.

The concept of 550-600+ divestitures of Albertsons Cos properties prior to merger being approved and closed makes perfect sense. The disconnect is the idea that they'll all go to SpinCo. If anything close to 200 are lined up to land at SpinCo when it's done that will be more than they want to see leave with lesser control.

[HCal]

There is zero chance stores are allowed to go directly to a SpinCo organization without being offered up for sale first to satisfy the regulators. They will want to find a way to basically make it a union operator only auction, but there definitely are going to be bids taken before a spin occurs.

That is not in the merger agreement (based on media reports) and I doubt they are going to renegotiate it at this stage.

[storewanderer]

There is zero chance stores are allowed to go directly to a SpinCo organization without being offered up for sale first to satisfy the regulators. They will want to find a way to basically make it a union operator only auction, but there definitely are going to be bids taken before a spin occurs. This is another reason why when I see these fantasy lists that 2/3rds of the stores in a whole region will "go to SpinCo" I laugh because it just doesn't connect to reality. Same reason why Zip Codes are not valid anymore because the population densities are so out of whack. They are going to make sure the stores that they really would like to see closed if they controlled the destiny of every site will be placed into SpinCo, which should be renamed TitaniCo or maybe HindenbergCo because it will be a spectacular disaster that gets liquidated within months. They'll only be able to divest Albertsons Cos properties up front before the merger closes, but then I expect to see any unwanted or problematic Kroger owned store jettisoned to SpinCo after the close (these ones will not be available for sale to other companies as the merger will already be done). The whole divestiture process is designed by the government to sell the stores not spin them off. It is absolutely in their best interest that any store they really don't want goes into SpinCo...

Okay now to the subject of the thread. Bob Miller going to Save Mart really cements the hypothesis that they will seek PE funding to buy everything they can get their hands on all the way south through San Diego and then bring the 20+ year old Lucky debacle home to roost by rebranding everything they buy as Lucky. I am firmly convinced that as part of making sure SpinCo fails Kroger will not want to let go of any banner name. They will claim the value of these brand assets are too high and were essential parts of the merger (even if they proceed to hang a Kroger sign on every box two seconds after the deal closes). That way when the SpinCo store becomes Kaggen or Maggen or some other name nobody has ever seen (get it) customers abandon it in droves. I now wonder if they are going to line up and bid on every last store proposed to divest and then aggressively relaunch the Lucky brand in SoCal.

The concept of 550-600+ divestitures of Albertsons Cos properties prior to merger being approved and closed makes perfect sense. The disconnect is the idea that they'll all go to SpinCo. If anything close to 200 are lined up to land at SpinCo when it's done that will be more than they want to see leave with lesser control.

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.

Kroger is going to have to give something here if they really want this merger approved. Kroger is going after marketshare and I think their goal is to cement a top marketshare position in many markets. Selling random castoff stores to Save Mart, Save Mart will never get top marketshare in these markets and will barely be a blip on Kroger's radar as a competitor with 4th or 5th place share. But that is okay- they can have low marketshare and some profitable stores.

The management team assembled for Save Mart is an impressive group of primarily old Albertsons people with experience in various regions across the US and decades of experience. Adding Bob Miller to their Board puts the strength of that management team over the top. This is going to look exactly like the Albertsons LLC project that Cerberus had Bob Miller running, but now he is overseeing it via the Board as opposed to actually operating the thing.

I don't think the management at Save Mart is going to agree to a poor deal. This management team has strong enough grocery experience to understand what is needed to make these stores viable long term (either as going concerns for their company or to be sold to other parties). This isn't a group of accountants, this is a group of grocers. They will demand the facilities they feel they need to make these stores work/make the stores viable to be marketed to other parties. This means they will need distribution centers and some manufacturing plants at least short term.

What will get even more interesting is if this group tries to make a play to get Rite Aid as a way to get pharmacy operations again. Like they could sell the pharmacies to Walgreens again, then turn around and acquire Rite Aid (no overlap or FTC issue if they are out of the pharmacy business in those regions).

I have been very negative with Save Mart in the past. I did feel they improved in the last couple years prior to being sold, due to their remodel program and what seemed like stronger ads/pricing. But this current Save Mart being run by a large experienced group of tenured Albertsons people is not the same Save Mart as 4-5 years ago that had a rather light management team; Save Mart lost some key management right before they bought the NorCal Albertsons and I think that did not help that transaction any.

I also expect Save Mart to gain full rights to the "Albertsons" banner which I expect is going to be the banner on the majority of the divested stores. Not even having to do banner changes on many stores will be a fantastic deal for Save Mart. Kroger can go ahead and banner change the 50 or so Albertsons locations they are allowed to keep in Montana, El Paso, and random other spots.

[storewanderer]

There is zero chance stores are allowed to go directly to a SpinCo organization without being offered up for sale first to satisfy the regulators. They will want to find a way to basically make it a union operator only auction, but there definitely are going to be bids taken before a spin occurs.

That is not in the merger agreement (based on media reports) and I doubt they are going to renegotiate it at this stage.

The way the merger agreement reads (as you describe- divests go to SpinCo) contradicts statements that have been made by management to various media sources. Management has basically come out and said they will look to sell/divest stores. Whatever cannot be sold goes to SpinCo.

My guess is Save Mart is the same thing as SpinCo so in essence the stores all go to SpinCo but SpinCo is actually Save Mart.

Save Mart will have no problem getting financial backing to buy stores with the proven management team it has in place now. Biggest hurdle I see now is Save Mart needs to ensure they get a banner to use on stores. I do not suggest converting ANY stores to "Save Mart" banner. But there may be some that would make sense to convert to Food Maxx... I have mixed feelings about the Lucky banner. Save Mart's version of Lucky is not the real version of Lucky.

[ClownLoach]

There is zero chance stores are allowed to go directly to a SpinCo organization without being offered up for sale first to satisfy the regulators. They will want to find a way to basically make it a union operator only auction, but there definitely are going to be bids taken before a spin occurs.

That is not in the merger agreement (based on media reports) and I doubt they are going to renegotiate it at this stage.

Doesn't have to be. The FTC settlements of previous mergers mandated that the stores selected needed to be offered for sale individually. The merger agreement is not the law.

Having said that, it is possible that the Save Mart folks are building up to be able to put in a superior bid for everything.