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Albertsons/Safeway was purchased by private equity [0]. They used the terms of the merger to 'cash out' - my understanding was the PE firm has already drained A

Albertsons/Safeway was purchased by private equity [0]. They used the terms of the merger to 'cash out' - my understanding was the PE firm has already drained Albertsons' cash reserve. Checking on the twitter, apparently they're using what cash Albertsons has left to do a share buyback, and are going to sue Kroger [1] for sabotaging the merger by not addressing the regulators' concerns. [0] https://www.bloomberg.com/news/articles/2022-10-19/cerberus-16-year-albertsons-investment-a-tale-of-twists-turns https://www.bloomberg.com/news/articles/2022-10-19/cerberus-... [1] https://www.albertsonscompanies.com/newsroom/press-releases/news-details/2024/Albertsons-Files-Lawsuit-Against-Kroger-for-Breach-of-Merger-Agreement/default.aspx https://www.albertsonscompanies.com/newsroom/press-releases/...

Blackthorn 2y ago
It's heartwarming to see private equity plans fail like this.
screye 2y ago
How is the nation's biggest grocery store being identified as a PE target ? It isn't a growth business. It isn't underperming expectations. It doesn't have expansion opportunities. Brick and mortar is already struggling and behemoths like Amazon and Walmart are in a leading position in online sales. It's a head scratching decision. I would love to be a fly on the wall when such proposals are made.
- mrguyorama 2y ago
  Because it's trivial to take an existing healthy business and extract value from it? Literally cannibalizing a business is a way to make money. The group that killed Sears for example knew what they were doing, and got very wealthy doing it. As long as there is a nonzero switching cost for any business relationship, it is profitable to take over that business and milk that switching cost for pure profit. Switching costs go up non-linearly as your market approaches monopoly or duopoly.
whoitwas 2y ago
They've both been owned by BHN for a long time, which was acquired by Silverlake Holdings.

Blackthorn 2y ago

It's heartwarming to see private equity plans fail like this.

screye 2y ago

How is the nation's biggest grocery store being identified as a PE target ? It isn't a growth business. It isn't underperming expectations. It doesn't have expansion opportunities. Brick and mortar is already struggling and behemoths like Amazon and Walmart are in a leading position in online sales. It's a head scratching decision. I would love to be a fly on the wall when such proposals are made.

mrguyorama 2y ago
Because it's trivial to take an existing healthy business and extract value from it? Literally cannibalizing a business is a way to make money. The group that killed Sears for example knew what they were doing, and got very wealthy doing it. As long as there is a nonzero switching cost for any business relationship, it is profitable to take over that business and milk that switching cost for pure profit. Switching costs go up non-linearly as your market approaches monopoly or duopoly.

whoitwas 2y ago

They've both been owned by BHN for a long time, which was acquired by Silverlake Holdings.