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Albertsons shares take a pounding

Shares of Albertson’s Inc. plunged Friday after the supermarket chain said it is no longer considering a sale of the entire company.
/ Source: Reuters

Shares of Albertson’s Inc. plunged Friday after the supermarket chain said it is no longer considering a sale of the entire company.

Albertson’s stock fell $2.74, or 12 percent, to close at $20.54 Friday on the New York Stock Exchange. The stock has traded in a 52-week range of $19.26 to $26.51.

The nation’s second-largest grocery store chain said late Thursday it will continue talks with “several parties” interested in buying its underperforming divisions but had not gotten an offer for the entire company it deemed suitable.

CVS Corp., a Rhode Island-based company that has more than 5,400 retail and specialty pharmacy stores nationwide, and other potential suitors reportedly withdrew from talks on Thursday.

Dave Parker, Albertson’s vice president of investor relations, said Thursday that the Boise-based company decided against selling the whole company because it had not received a bid it found acceptable. He declined to elaborate on the talks or say who else had expressed an interest in Albertson’s assets.

Minnesota-based supermarket chain Supervalu Inc. also said late Thursday that it and Albertson’s had “mutually agreed to terminate all discussions regarding an acquisition of Albertson’s by a consortium of investors.”

That consortium, according to the New York Times, had been the leading bidder in an auction to buy the supermarket chain for approximately $9.6 billion in cash and stock, or about $26 per share. The group consisted of CVS, Supervalu, the New York investment fund Cerberus Capital, and New Hyde Park, N.Y.-based real estate investors Kimco Realty Corp., according to the newspaper.

According to the report, Albertson’s board was considering selling some underperforming stores and its pharmacies, using the proceeds to recapitalize.

Albertson’s is No. 2 behind Kroger Co., with about 2,500 stores including Albertson’s, Acme, Shaw’s, Jewel-Osco and Sav-on Drugs.

The company announced Sept. 2 it was interested in pursuing “strategic alternatives” to increase shareholder value and launched a three-month auction to accept bids on the chain. Albertson’s has struggled due to an extended period of lagging sales results, a stagnant share price and competition from lower-cost rivals such as Wal-Mart Stores Inc.