Albertsons, the U.S. supermarket operator controlled by buyout group Cerberus Capital Management, is reported to be exploring a takeover of high-end grocer Whole Foods (NASDAQ: WFM).
The U.S. private equity group that backs Albertsons has had preliminary talks with bankers about making a bid for Whole Foods, according to one source close to the buyout firm. However, the sources say, no formal bid has yet been made.
Albertsons' announcement comes but two weeks after Jana Partners, the activist investor, revealed it had built a 9% stake in Whole Foods and raised the possibility of a sale of the grocer, which has a market value of $11.4 Billion U.S. A deal would be one of the largest take-privates in recent years
Whole Foods, based in Austin, Texas, is reported to have hired Evercore Partners to advise them on a strategic review of its business operations, which could include exploring a sale.
A bid for Whole Foods would come less than three years after Albertsons acquired Safeway for $9 Billion U.S. in a deal that turned the Boise, Idaho-based group into the third -largest supermarket chain in revenue terms behind Walmart and Kroger.
Two years ago, Albertsons, which operates about 2,200 stores, shelved a plan for an initial public offering because of market jitters. Cerberus is likely to team up with other investors to carry out a successful deal given Whole Foods' size.
Whole Foods saw its stock climb a healthy 96 cents a share, or 2.7%, to $36.67 Monday afternoon within an hour of the closing bell.
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