Whole Foods, you may have heard, isn’t doing so hot. It’s cut plans to triple its store count, had its foot traffic drop a “staggering” amount, and seen its stock plummet over the last four years. Now, sources tell the Financial Times that rival supermarket operator Albertsons is exploring the possibility of a Whole Foods takeover.
The news is somewhat surprising: Last month, it was reported that Albertsons, which is owned by Cerberus Capital Management, had been discussing a merger with Whole Foods rival Sprouts Farmers Market. But hedge fund Jana Partners took a nearly 9 percent stake in Whole Foods, making it the company’s second-largest investor, and immediately started to use its newly developed muscle to demand changes. That includes looking at how much a potential buyer might pay for Whole Foods.
Cerberus clearly heard the siren call, because it’s moved on from Sprouts to Whole Foods. It’s reportedly had preliminary talks with bankers about a potential bid, though no formal action has yet been taken. Nonetheless, the news caused Whole Foods’ stock price to rise 2.1 percent and Sprouts’ to drop 3.3 percent. If Cerberus does make a successful bid for Whole Foods, it would mean fairly major consolidation in the grocery world. Albertsons also operates Safeway, which it took over three years ago and subsequently turned into the third-largest supermarket chain in revenue, behind only Walmart and Kroger (which is itself in the midst of a different kind of expansion).