Albertsons held preliminary merger talks with Sprouts: Bloomberg

Sun Mar 19, 2017 8:54pm EDT
 
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By Lawrence Delevingne and Lauren Hirsch

NEW YORK (Reuters) - Grocery business Albertsons Cos held preliminary talks to merge with Sprouts Farmers Market Inc SFM.O, Bloomberg reported on Sunday, citing people familiar with the situation.

Bloomberg said the early stage discussions took place in recent weeks and involved a plan to take Sprouts private. Doing so would add the natural and organic foods-focused business to the Albertsons suite of supermarket brands, which includes Safeway, Vons and Shaw's.

Albertsons is backed by private equity firm Cerberus Capital Management. Representatives for Albertsons and Sprouts did not immediately respond to requests for comment, while a spokeswoman for Cerberus declined to comment.

Shares of Sprouts spiked to a four-month high on Thursday and Friday amid a surge in stock options trading.

SUPERMARKET CONSOLIDATION

An acquisition of Sprouts would underscore the consolidation sweeping the U.S. grocery industry, as regional chains struggle to compete against online retailers such as Amazon.com Inc (AMZN.O: Quote), big box stores such as Wal-Mart Stores Inc (WMT.N: Quote), and discount chains such as ALDI Inc.

Albertsons is one of the two most active industry acquirers along with The Kroger Co. (KR.N: Quote). A planned initial public offering for Albertsons' has been delayed since October 2015. At the same time, Krogers stock is up more than 140 percent over the last five years despite falling 23 percent over the previous 12 months.   Continued...

 
Customers leave an Albertsons grocery store with their purchases in Burbank, California July 17, 2012. REUTERS/Fred Prouser