New consortium will be nation's fourth largest food chain
Supervalu, CVS Corp. and an investment group led by Cerberus Capital Management put an end to recent press speculation Monday by announcing an agreement to buy retailer Albertson's Inc. for $17.4 billion cash, stock and debt.
Stockholders of Boise, Idaho-based Albertson's(ABS)will receive $20.35 in cash and a fixed exchange ratio of 0.182 share of Supervalu(SVU)stock for each of their shares, bringing the total consideration per share to $26.29.
Albertson's ended Friday's trading at $24.11, up 1% on the session.
On an annual basis, the transaction is expected to begin contributing immediately to Supervalu's earnings per share at a double-digit rate, excluding one-time costs.
After the deal, which is expected to close in the summer, about 65% of the new Supervalu will be held by existing stockholders and the rest by Albertson's stockholders
The purchasing consortium consists of Eden Prairie, Minn.-based Supervalu (NYSE: SVU); CVS Corp. (NYSE: CVS) of Woonsocket, Rhode Island; New York-based investment fund Cerberus Capital Management and Hyde Park, N.Y.-based real estate investment company Kimco Realty.
Shaw's Supermarkets & Star Markets here part of sale
Supervalu will acquire the operations of Acme Markets, Bristol Farms, Jewel-Osco, Shaw's Supermarkets, Star Markets, some Albertsons banner stores and related in-store pharmacies under the Osco and Sav-on banners.
For its part, CVS(CVS)will acquire some 700 stand-alone Sav-On and Osco drug stores as well as Albertson's ownership interests in the stores' underlying real estate.
The consortium will buy stores in Dallas/Ft. Worth area as well as in Northern California, Florida, the Rocky Mountains and the Southwest.
Media reports over the weekend had suggested that the company was near a deal to sell itself to the consortium of competitors and investment firms for $9.7 billion in cash and stock.
The acquired store banners are: Acme Markets, Bristol Farms; Jewel-Osco, Shaw's Supermarkets, Star Markets and Albertsons, which operates more than 20 stores in the Portland region. The deal also includes the combined grocery-pharmacy stores under the Jewel and Sav-On franchises.
The consortium made a $9.6 billion offer for Albertsons (NYSE: ABS) in December, but the grocery chain's board rejected the bid. The new deal reportedly includes a revised structure intended to ease antitrust concerns.
CVS adds 700 new locations in the deal
CVS of Woonsocket, R.I., is purchasing about 700 stand alone Sav-on and Osco Drugstores and Albertson's ownership interests in the drugstore real estate for about $2.9 billion. The chain now operates more than 5,000 stores. Read the FTC release on the sale below these links.
FTC Agreement with Shaw's Supermarkets and Star Markets Preserves Supermarket Competition in Greater Boston Area
The Federal Trade Commission today announced a proposed settlement agreement with Shaw's Supermarkets, Inc. and Star Markets, Inc. The agreement would resolve FTC charges that the proposed acquisition of Star Markets by Shaw's would substantially lessen supermarket competition in the Greater Boston metropolitan area and could result in higher prices or reduced quality and selection for consumers.
The proposed agreement permits the acquisition but would require Shaw's to divest 10 supermarkets -- three Shaw's supermarkets and seven Star Markets supermarkets -- in eight communities. Read the rest of the FTC statement here, and make your comments below.