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Kroger Most Attractive of Albertsons' Suitors: Analysts

BOISE, Idaho -- Five bidders, including Cinncinati-based Kroger, have emerged as suitors for the Albertsons, Inc. grocery chain. According to The Wall Street Journal and The New York Times, there have been five preliminary bids for Albertsons in the high $20s per share, or more than $10 billion, as well as bids from Walgreen and CVS for the company's drug store chains. The analysts believe, however, that the synergies from the acquisition of the company by Kroger would be the most attractive.

The bids have pushed the retailer's ranking to "buy" at BB&T Capital Markets and helping retail stocks in general. But a deal is still weeks away, according to industry experts.

"It's more likely that Albertsons will be sold as a whole among a consortium of buyers, who will then break up the pieces themselves," Neil Stern, partner with Chicago-based retail consulting firm McMillan-Doolittle, told Progressive Grocer. "In Kroger's case they may partner with such buyers, targeting specific pieces of the company for itself."

At least three bidders are consortiums led by investment groups, according to published reports, including one led by Kohlberg Kravis Roberts, one by Thomas H. Lee Partners, and one by the Yucaipa Cos., which earlier this year agreed to pay about $150 million for a stake in the Pathmark supermarket chain.

Any bids would be preliminary, said Stern, and a deal -- because of the size and complexity of the companies involved -- could be weeks away.

Still, news about the bids had a positive effect on the retail industry as a whole -- the Standard & Poor's Retail Index rose 1.6 percent from its opening numbers, closing at $440.76.
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