ACME’s parent Albertsons plans to sell ACME and its other chains
Albertsons Cos., the parent company that owns Malvern-based Acme Markets, may seek to offload some of its nearly two dozen grocery chains as the company launches a review of its business strategy, analysts said.
The sale of shares in the company would reward Cerberus Capital Management and Philadelphia-based Lubert-Adler Partners, two large investment firms that took Albertsons to the public markets and now own nearly half of its shares. In December, New York-based Cerberus held a 32% stake and Lubert-Adler 12%. The companies did not respond to requests for comment.
The Boise, Idaho-based supermarket operator went public in 2020, selling around 50 million shares at $16 apiece. Since the IPO, share prices have risen about 85% before the announcement of the revision on Monday sent the stock higher as Wall Street welcomed the move. The stock price closed at $35.70 on Thursday, up $3.70, or more than 11%.
» READ MORE: Acme grocery chain is sold to investment group
Albertsons, the second-largest grocer in the United States behind Kroger, blasted potential suitors in its Feb. 28 announcement. The company said the review, aided by Goldman Sachs and Credit Suisse, would include consideration of “potential strategic or financial transactions” and entertaining “investigations,” generally outside of possible merger or acquisition offers.
“The Board of Directors believes that the continued strength of our business and the breadth of our portfolio of assets warrants careful and thoughtful consideration of all possible avenues towards maximizing value creation,” said Chan Galbato, co-chair of the board of directors, in a press release. Galbato is Managing Director of Cerberus Operations, which provides operational consulting to Cerberus portfolio companies.
Albertsons gave no timeline for the review, gave no indication that it was leaning towards a strategic direction, and added that the review could result in no action at all. A spokeswoman said Albertsons had no further comment.
“These investors buy assets for a song, put some money in it, improve the stores, and then resell for a profit. Now they want to get good returns on that,” said John Stanton, professor of food marketing at St. Joseph’s University in Philadelphia “Their real business is to sell businesses, not food. That’s what you hire investment bankers for, to sell assets.”
Acme could be sold “as real estate” to other chain stores, said Stanton, who is unrelated to the review. Acme, based in East Whiteland Township, has about 161 stores in Connecticut, Delaware, Maryland, New Jersey, New York and Pennsylvania.
Although the review surprised some industry observers, analysts at Morgan Stanley at Guggenheim speculated that parent company Albertsons might be worth more in pieces, offering a large payout to its biggest investors. Albertsons operates approximately 2,300 supermarkets, 1,700 stand-alone pharmacies, 400 gas stations and dozens of warehouses and food processing plants, spread across 34 states. Besides Acme, Albertsons’ major brands include Safeway, Jewel Osco and Vons.
Albertsons and other grocers have felt growing pressure, not just from Walmart, whose in-store markets rank it among the largest supermarket operators, but also from Amazon, whose same-day deliveries and Whole Buy Foods positioned it to sell more groceries. Grocery consultants say even the biggest chains will need to spend more on marketing, inventory, automation and delivery services to protect their market share.
Cerberus’ past investments include Chrysler Corp.; one of his current ventures is FirstKey Homes, which has purchased 25,000 suburban homes across the country for rental.
Based in Philadelphia, Lubert-Adler is a real estate company whose main investors include Pennsylvania state pension funds. Partner Dean Adler was the architect of the investment funds’ purchase and expansion of Albertsons in the early 2000s in hopes of cutting costs and increasing sales under one management team.