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Albertson’s Details Asset Division in Pending Sale

Grocery and drug retailer Albertson’s Inc. has provided details about how its approximately 2,500 stores will be divvied up among members of a consortium of investors who have inked a deal to buy the chain later this year.

The Boise, Idaho-based retailer has agreed to sell the entire company for approximately $17.4 billion in cash, stock and assumed debt to two groups of investors. The first includes SUPERVALU Inc. and CVS Corp. The second, led by private-equity fund Cerberus Capital Management LP, includes Kimco Realty, Schottenstein Stores Corp., Lubert-Adler Partners and Klaff Realty.

The lion’s share of Albertson’s real estate will go to SUPERVALU, including approximately 1,124 stores and all support operations for Acme Markets, Bristol Farms, Jewel-Osco, Shaw’s, and Star Markets, as well as all Albertson’s banner stores in Idaho, Southern Nevada, Utah, Southern California, and the Northwestern United States. This includes combo-store pharmacies, which operate under Osco and Sav-on banners.

After the acquisition, SUPERVALU will have a total store count of 2,656 stores in 48 states and the District of Columbia, with annual revenues of approximately $44 billion.

CVS will acquire Albertson’s stand-alone drugstore business, including approximately 700 stores and a distribution center in La Habra, California. CVS will acquire Albertson’s ownership interests in the drugstore real estate and intends to sell these interests at or soon after closing in a sale-leaseback transaction, according to Albertson’s. All stand-alone drugstores included in the transaction will be re-bannered as CVS.

The Cerberus-led consortium will acquire 655 stores and all distribution centers and offices in Albertson’s Dallas/Fort Worth division, and in the Florida, Northern California, Rocky Mountain and Southwestern regions. Cerberus has also purchased 26 Cub Stores from SUPERVALU in the Chicago area for an undisclosed amount.

The transaction is subject to approval by Albertson’s and SUPERVALU shareholders as well as customary regulatory approvals. It is expected to close in mid-2006.

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