Grocery chain A&P is considering putting itself up for sale. The 320-store chain, which emerged from bankruptcy in 2012, told store managers in a memo last week that it is considering multiple options including a sale, according to the Wall Street Journal. An unnamed source suggested Kroger (NYSE:KR), Ahold and Cerberus as possible buyers.
Other options outlined in the memo from A&P chairman Gregory Mays include raising capital, a refinancing or funding slower growth from cash flow. However, a sale is the most likely option and could value the grocer at $1 billion or more, according to an unnamed source quoted by the Journal, the same source said the process is in its early stages.
A&P filed for Chapter 11 bankruptcy in December 2010, and closed 20 percent of its stores. Since coming out of bankruptcy it has increased its liquidity by $200 million and reduced its debt by 30 percent but is still not profitable, the memo said. The privately held company had sales of about $6.3 billion in 2012, according to the National Retail Federation, down from $8.8 billion in 2009.
A&P operates stores under its own name as well as the Food Emporium, Pathmark and Super Fresh banners.
While a sale may really be the most likely option for A&P, the buyers suggested by the Journal's source sound like wishful thinking. Kroger could buy the chain, but it's not exactly an active buyer. It just agreed to buy the 200-store upscale Harris Teeter chain, and before that its last purchase of a chain was in 1999. Ahold would see plenty of geographic overlap with A&P's current stores. Cerberus is an active buyer and just lost with its bid for Harris Teeter, but it still has Albertsons to digest along with its boardroom coup at Supervalu.
- See this Wall Street Journal story
Kroger Buys Harris Teeter For $2.5 Billion, No Name Change For The Stores
Albertsons Owner Cerberus Makes Bid For Grocer Harris Teeter
Ahold Won't Be Changing Stop & Shop's Name After All