In a year of intense merger and acquisition activity for food retailers, it’s not surprising that many of the most-read stories on SN’s website in 2013 were related to such strategic maneuvering. A story about Costco’s plans for growth turned out to be the top story of the year, however, based on the number of online page views.
Costco Wholesale Corp. detailed its aggressive growth plans during a conference call with investors in May, when it said it would add 150 of its membership warehouse clubs around the world in the next five years. About two-thirds of those are planned for outside the U.S. “The U.S. club market is still under-stored, and there are virtually no markets in which the format would not work,” said John Heinbockel, managing director at Guggenheim Securities, New York.
Robert Miller, the chief executive officer of Albertsons, told SN of his plans to grow the company after its acquisition of its former sister banners — Jewel-Osco, Acme and Shaw's/Star Market, as well as several hundred Albertsons locations — early in 2013. “Our intention is to run really good stores and make them better. We have no plans to sell any of the brands,” he said in this November interview. The company also is acquiring United Supermarkets in Texas.
In March, industry observers predicted that 2013 could be a busy year for mergers and acquisitions in food retailing, and they turned out to be right — although after Cerberus reunited Albertsons and its sister banners, things didn’t quite unfold exactly as predicted.
In a portent of asset sales to follow later in the year, Delhaize in January said it would close 33 of its money-losing Sweetbay stores. A few months later, it announced a deal to sell the rest of the chain, along with its Harveys and Reids banner, to Bi-Lo Holdings.
Supervalu kicked off 2013 with the announcement that it had reached an agreement to sell its Albertsons, Jewel-Osco, Acme, and Shaw’s and Star Market banners to a group led by Cerberus Capital Management in a transaction valued at $3.3 billion. The deal would reunite the two Albertsons banners that had been split since Supervalu acquired most of that chain in 2006.
Following Delhaize’s announcement in January that it would close 33 Sweetway stores, the company in May found a buyer for the rest of the chain, as well as its Harveys and Reid’s banners. Bi-Lo Holdings, which a year ago had merged with Winn-Dixie, agreed to pay $265 million in cash. In 2012, the 165 stores included in the transaction generated revenues of approximately $1.8 billion.
SN’s annual list of the largest small chains and independent supermarket companies reflected some of the growth that has been occurring among these operators. Fareway Foods, Boone, Iowa, topped this year’s list, and PAQ Inc., Stockton, Calif., was No. 2.
A panel of equity analysts discussed their views on the drivers of M&A activity in food retailing, among other topics. Scott Mushkin, managing director of Wolfe Research, New York, said consolidation is being spurred by efforts to get things back to normal after the recession of 2008, though five years later, “things still aren’t normal.”
Delhaize in January followed up its top-level management changes with a reorganization after the company failed to realize cost-saving targets set last summer, according to a memo detailing the new structure distributed to employees Friday by Roland Smith, Delhaize America’s short-tenured chief executive officer. He himself would resign shortly afterwards.
Harris Teeter Supermarkets in February said it had received an offer to acquire the company from two private equity firms and had subsequently engaged J.P. Morgan to evaluate its strategic alternatives. A few months later, Cincinnati-based Kroger Co. emerged as the leading bidder.
Read more: The Top 10s of 2013 at SupermarketNews.com
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