Dive Brief:
- Albertsons' Jewel Food Stores chain is the mystery bidder for 19 Strack & Van Til stores, according to Supermarket News.
- Jewel’s offer of $70 million plus and additional $30 million for inventory takes on the "stalking horse" bid in a court-led bankruptcy auction. This means the company was the initial bidder that Central Grocers chose to negotiate with prior to the auction of assets. Central Grocers has proposed to receive competing bids by June 21, and if needed, plans to hold an auction June 26, the Wall Street Journal reported.
- Jewel-Osco intends to extend offers of employment to substantially all of the current store employees as part of the transaction.
Dive Insight:
Central Grocers filed for Chapter 11 protection earlier this month and is looking sell off all of its assets in an effort to pay back creditors. Its 22 Strack & Van Til stores and a 1-million-square-foot distribution center in Joliet, Illinois, are its main pieces, and it looks like the company is going to reach most of its goal at auction.
In taking on the 19 stores, Jewel-Osco will increase its presence on its home turf, the Midwest—especially Indiana and the Chicago area — locations the retailer has looked to expand in for some time. The company has said it would not close any store locations as a result of the transaction, pending the outcome of the court-supervised sale process and customary regulatory approvals.
In March, The Chicago Tribune reported several grocery retailers were looking to purchase locations belonging to Dominick’s grocery chain, hoping to take advantage of the city’s need for more retailers. Mariano’s and Jewel-Osco together account for a combined 30% market share in Chicago, and this is a way for Jewel-Osco to get a little ahead of its competition.
Strack & Van Til could be a savvy acquisition for the Midwest-focused grocer, as it will help them compete with some of the new discount grocers coming to market. The fact that it’s a bankruptcy sale won’t affect what’s happening inside the stores and customers shouldn’t notice much of a difference outside of possible upgrades and renovations. If successful, the transaction would mark a further expansion by Albertsons, which purchased Safeway in 2015. Albertsons, which is owned by Cerberus Capital Management, was rumored in March to be interested in Sprouts Farmers Markets, and earlier this month was reportedly interested in buying beleaguered grocer Whole Foods.