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Albertson's could ring up $9.6B buyout
Report: Nation's No. 2 grocer could be sold to group including rival Supervalu.
December 16, 2005: 6:25 AM EST

NEW YORK ( - Albertson's, the nation's No. 2 grocery chain, is close to being purchased in what could be one of the largest leveraged buyouts in history, according to a published report Friday.

The Wall Street Journal reports that Cerberus Capital, Kimco Realty (Research), and grocery chain Supervalu (Research) is poised to buy Albertson's (Research) for about $9.6 billion, or $26 a share. That's a premium of about 8 percent from Thursday's closing price.

The paper reported a deal could be announced after Albertson's board meets this weekend. It said negotiators are still hashing out details with drugstore retailer CVS (Research), which the paper reported is in the lead to purchase the grocer's drug chain for up to $4 billion of the purchase price. The company has about 700 stand-alone drugstores, using the Osco Drug and Sav-on brand names.

The paper reports the deal will be valued about $16 billion, including assumed debt, which would make it the No. 2 leveraged buyout in history, behind only the $29 billion purchase of RJR Nabisco Inc. by Kohlberg Kravis Roberts & Co. in 1988.

The paper reported the deal could lead to heavy layoffs and store closings, as the 66-year-old grocer loses ground to growing competition from Wal-Mart Stores (Research). The company has 2,500 stores in 37 states.

Observers told the paper that Supervalu probably isn't interested in running the entire operation but instead will take over one or more of Albertson's attractive divisions, most likely its Jewel stores in the Chicago area.

Analysts also predict to the paper the buyers will jettison Albertson's roughly 470 stores in Texas, Florida, Colorado and Arizona.

For a look at the year's top corporate deals, click here.  Top of page

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