The owner of Albertsons wants to buy more grocery chains—and the owner of Food Lion wants to sell some chains. But for the moment, there doesn't seem to be any connection between the buyers and sellers.
Cerberus Capital Management, which acquired the half of Albertsons it didn't already own in February, is now looking at the 212-store Harris Teeter (NYSE:HTSI) chain in the southeast, according to Dow Jones. The $4.3 billion chain is reportedly one of a half-dozen grocers that Cerberus is considering. Harris Teeter has publicly said it is exploring a potential sale.
But Harris Teeter would be a departure for Cerberus—an up-market chain that's not really a turnaround candidate, unlike other chains the private equity firm has acquired, such as Jewel-Osco and Shaw's. Bain Capital is also reportedly interested in the chain.
On the seller side, the owner of Food Lion and Hannaford, Belgian grocer Delhaize, has hired Lazard to sell its Harveys and Sweetbay chains, Reuters reported.
Those supermarkets are also all in the southeast U.S. The 73-store Harveys chain focuses on selling regional and fresh products. The 105-store Sweetbay chains markets to Hispanic customers.
It has become a retail cliche that traditional supermarket chains have been squeezed between low-cost chains like Costco (NASDAQ:COST) and Walmart (NYSE:WMT) and upscale grocers like Whole Foods (NASDAQ:WFM). That may be putting it politely: In practice, it's the weakest grocers, frequently regional chains, that have been passed around for the past decade or two.
But there's only so much room for Cerberus, Bain and others to turn around weaker chains that don't have a special reason to exist. And with national pure-play grocery chains like Kroger (NYSE:KR) and Safeway (NYSE:SWY) taking the Walmart-Target-Costco threat seriously, there's less loose market share to survive on—and there may soon be a lot fewer of those weak regionals to pass around.