If it's Monday in the markets, it's time to talk about deals, or at least rumors about deals. In what probably shouldn't surprise anybody with a cerebral cortex, American supermarket chain Albertsons
Even though Albertsons management hasn't done an exactly stellar job of late, the chain operates about 2,500 locations and owns around 60% of its real estate. And while Wal-Mart
As I initially suggested in my earlier piece on the company, private financial buyers have come into the picture. If sources and rumors have any credibility, then the well-known likes of Kohlberg Kravis Roberts, Bain Capital, and Cerberus are already sniffing around.
What's more, Europeans are supposedly looking at Albertsons, with France's Carrefour, Beglium's Delhaize
So, who are the pretenders and who are the contenders? Well, if KKR or Bain is seriously interested, they're both automatically contenders -- particularly if one of them teams up with one of the drugstore chains. Tesco also makes sense, since it would offer a larger entryway to the American market beyond its partial ownership of GroceryWorks.com with Safeway
Carrefour is already the world's second-largest retailer. It has stores around the world and appears to have enough balance-sheet flexibility to carry out the deal. Delhaize, though, seems to be more of a pretender. Apart from whether there would be synergies with its U.S. Food Lion business, the company has plenty of debt and is actually smaller in terms of market capitalization.
With so many supposedly interested parties, the auction process could get a bit interesting. I would never suggest, though, that an investor should buy a stock simply on the hopes of a buyout. More often than not, that's a very un-Foolish investing move. But I can also understand the attraction. Albertsons could well fetch a price 10% to 20% higher (or more) than today's price and will pay a nice dividend while you wait.
Fill a grocery bag with more Takes:
- Kroger's Not Afraid of Wal-Mart
- Albertsons Marked Down
- Albertsons on the Auction Block?
- Wal-Mart Cries Foul
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).