Albertsons close to $9.6 billion deal, reports WSJ

Albertsons close to $9.6 billion deal, reports WSJ

NEW YORK - The Wall Street Journal has reported in its Friday editions that the second largest grocer in the country, Albertsons' Inc is likely to be acquired by an investment group in a deal worth $9.6 billion.

The report also said that Cerberus Capital, Kimco Realty and Supervalu, the Minnesota supermarket chain are the likely bidders for the grocer. Boise-based Albertsons has been struggling since last year as it battled with low-cost rivals like Wal-Mart.

Company officials had announced an auction on September 2 for the grocer as it battled falling sales and revenues. It was also reported by the WSJ that Albertsons is pursuing additional talks with CVS for its pharmacy business.

Albertson's board of directors is scheduled to meet at the weekend to discuss the $26 a share offer. It was speculated that more than three bidding groups were interested in pursuing Albertsons, which has 2,500 stores including 166 supermarkets in Northern California. When asked to comment on a prospective deal, Shannon Bennett, an Albertsons spokeswoman said, "Beyond the Sept. 2 announcement, I have no comment."

But union leaders intimated that they were aware that a deal was being tabled, "We think Albertson's has not been doing a good job in this market, so we welcome a new operator that would enhance the business. That means more hours and more jobs for our members," commented Ron Lind, who heads the Local 428 of the United Food and Commercial Workers in the area.

But Mark Lilien, an analyst at RetailWire.com maintained that any new owner would be under pressure to institute cost-cutting measures, which is definitely not good news for unions, "I agree that Albertson's was very poorly managed, but it would be a miracle if this helped (union) members," he observed. "Chances are 9 of 10 that new owners will have tremendous pressure to reduce cost." Shares in Albertsons rose 34 cents to $24.33 on expectations of closing the deal.