(Oct. 24) A buyout of grocery giant Albertson’s Inc. may be in the works, and one of its chief rivals may be involved.

Cincinnati-based The Kroger Co., the No. 2 retail grocery chain, has submitted a preliminary takeover offer to Boise, Idaho-based Albertson’s, Kroger’s No. 3-ranked rival, according to various media reports.

The reports came less than two months after Albertson’s announced it was looking into the possibility of selling part or all of the company.

Neither Albertson’s nor Kroger has commented on speculation about a possible deal between the two firms.

The news had one erstwhile skeptic about a possible Kroger buyout of Albertson’s taking a new position.

“I think Kroger might be part of one of the consortiums that might be making an offer for Albertson’s,” said Neil Stern, senior partner at Chicago-based retail consultant McMillan/Doolittle LLP. “I think what’s likely to happen is they and other companies, too, are bidding for Albertson’s, and I think it’s going to be a combination of private equity firms and possibly some strategic buyers like a Kroger or like a drugstore chain.”

According to Reuters news service, Kroger, competing against several private equity firms, submitted a bid for the entire company.


According to media reports, at least three drugstore chains have put in bids, presumably for Albertson’s Osco and Sav-On drugstores.

Stern said buying part of Albertson’s could prove strategically shrewd for Kroger, but he also voiced doubts about Kroger’s intentions to purchase the whole company.

“I don’t think Kroger is doing this in its entirety,” he said. “I think Kroger is probably interested in some pieces of it. There are certainly geographies that I think would be more attractive and parts of the chain that would more attractive for Kroger to operate than others.”

Analysts said a buyout of Albertson’s could be worth more than $10 billion, plus the assumption of $6.5 billion in debt, Reuters reported.

Stern said he did not know how much the deal would be worth.

Whether a buyout will occur remains a matter of debate, Stern said.

“People are taking it seriously,” he said Oct. 24. “But I don’t think a deal is done, by any means.”

Albertson’s shares were trading at $25.03 in late-afternoon trading on the New York Stock Exchange Oct. 24. The stock closed at $24.06 on Oct. 21, when news of the potential buyout first surfaced. The stock had a 52-week range of $19.26-26.51.

Kroger shares closed Oct. 21 at $19.80 on the New York Stock Exchange. The stock had a 52-week range of $14.65-20.88.