Albertsons finally settles on $17.4 billion sale
agreed to sell the entire company to a syndicate, consisting of
rivals Supervalu, CVS and investor group Cerberus Capital.
The deal was announced on Monday following lengthy negotiations with the consortium of buyers.
Initially the American retail giant had rejected their December offer of $9.6bn, believing its comprehensive store network and distribution centres were worth more.
But now the price has been upped Albertsons is ready to sell off the 2,500 stores it operates across 37 US states.
Albertsons CEO Larry Johnston, said: "This transaction brings our review of strategic alternatives to a very successful conclusion. Over the past several years our team has executed a major restructuring of the company while simultaneously demonstrating strong financial performance compared to our primary traditional competitors in the areas of earnings, sales and free cash flow."
"We strongly believe this new opportunity will result in a bright future for all stakeholders," he added.
The company initially announced it was up for sale in August 2005, after exiting markets such as Omaha and New Orleans under its strategy to leave areas where it was not in the top two players.
The streamlined company still maintained number two position behind Wal-Mart and hoped to attract investment bidders who prefer to buy in bulk and sell off stores individually.
But Supervalu has scooped 1,124 stores from the deal, and now operates 2,656 supermarkets across America, elevating it to second position.
CVS has acquired 100 per cent of the standalone drugstore business, including 700 shops and a Californian distribution centre.
The Cerberus-led consortium, including Kimco Realty, Schottenstein Realty, Lubert-Adler Partners and Klaff Realty, will acquire 655 stores, and a further 26 Cub stores from Supervalu in the Chicago area for an undisclosed sum.
The deal is subject to approval by Albertsons and Supervalu shareholders but is expected to close in mid-2006.
Albertsons third quarter earnings from continuing operations totalled $81 million, compared to the previous year's $107mn. And total Q3 sales were $9.9bn - essentially flat with 2004's third quarter revenue.
Rival Wal-Mart saw sales rise to $2.4bn in the five-week period to December 31, and $25.2bn for the 48-week period to the year-end, heralding stiff competition in the highly consolidated US market for the new number two retailer Supervalu.
