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Another company approached Boise-based Albertsons company about an acquisition months before discussions with Kroger began.
The revelation was made in a filing with the Securities and Exchange Commission late Friday, reviewed by BoiseDev.
Enter Party A
The unknown company, referred to only as Party A, approached Albertsons in November of 2021 to discuss a potential acquisition. Over the next few weeks, Albertsons hired bankers and lawyers and worked to hash out an agreement to be acquired.
On December 14, 2021, Party A sent a “non-binding indication of interest” to buy Albertsons for $39 per share in cash – a premium of nearly $5 over the amount Kroger ended up offering this fall.
Albertsons and Party A, along with the bankers and lawyers, went to work negotiating a possible formal agreement. Party A bumped up its preliminary offer to $41 per share in early January, after hearing from Albertsons CEO Vivek Sankaran and COO Sharon McCollam on Albertsons’ strategy, business performance, and operating performance.
Throughout the month of January 2022 and early February, Albertsons and Party A worked through due diligence and started to hammer out a possible deal.
Then, the activity stopped.
“On the morning of February 12, 2022, Party A notified the Company that it did not wish to pursue a transaction at the current time and terminated discussions with respect to Party A’s potential acquisition of the company,” Albertsons wrote in the filing. “…Party A no longer believed a transaction with the Company was in its best interest.”
Later that month, as BoiseDev reported at the time, Albertsons announced publicly that it would start a “review of potential strategic alternatives.” The announcement sent a message that the company could be for sale.
In early March, Sankaran met again with Party A and “presented on the potential benefits of the transaction and addressed the concerts that Party A had raised with respect to the transaction.”
But Party A still wasn’t interested.
With no interest from Party A, or anyone else, Albertsons started to look at selling off $3 billion to $5 billion of its real estate holdings and leasing back store locations. McCollam telegraphed the concept in early June, as BoiseDev reported at the time.
According to the filings, that didn’t prove to be the right route, either.
“After evaluation of (real estate leaseback proposals), the company concluded that the proposals offered an unattractive rate of return,” the filing notes. “As a result, the company elected not to further pursue such sale-leaseback arrangements.”
Albertsons said despite hiring Goldman Sachs and Credit Suisse to find potential companies interested in buying the company, no one else stepped up after Party A said goodbye. Until Kroger.
It’s unclear what company may have been Party A – except that it is not Kroger Co. It also appears to be another player in the grocery sector, as Albertsons’ SEC filing indicates that stores may have had to be divested to meet antitrust approval.