Following speculation that Kroger may be mulling a bid for troubled natural and organic grocer Whole Foods, the Financial Times has reported a new potential suitor for the Austin, Texas-based grocer: Albertsons.
Although the Boise, Idaho-based grocery company has yet to make a formal bid, Cerberus Capital Management, Albertsons' parent, reportedly has been in preliminary talks with bankers about making one, while Whole Foods has hired Evercore to advise on a strategic review of business operations, possibly including a sale, FT reported. Whole Foods shares rose 3.6 percent following the report.
The news follows the report that investment firm Jana Partners and several food retail experts purchased a 9 percent stake in Whole Foods, collectively making them the chain's second-largest investor. The group intends to hold discussions with Whole Foods' board and management regarding several topics – from changing the makeup of the board and management to advancing brand development and addressing deficiencies in areas such as customer loyalty, analytics and other digital and technological capabilities.
It also comes after Bloomberg reported that Seattle-based ecommerce giant Amazon.com, currently seen as a potential bidder for the natural grocer, considered a takeover of the chain last fall but did not go through with the deal.
Beleaguered Whole Foods' situation has only gotten worse thus far this year: It announced its sixth consecutive quarter of declining comparable-store sales two months ago, causing it to adjust its outlook for fiscal 2017. Moreover, in its second fiscal quarter of 2017, it plans to shutter the remaining two of its three commissaries, and close more stores than it opens. Deflation of food prices along with increasing competition from traditional and hard-discount grocers in the natural and organic space are causing the troubles.