Will The Kroger Co. (KR) Put Another Acquisition in Its Shopping Cart?

Page 1 of 2

Having conquered the southern mid-Atlantic region and the Carolinas with its acquisition of Harris Teeter Supermarkets Inc (NYSE:HTSI), will supermarket powerhouse The Kroger Co. (NYSE:KR) add the Northeast to its dominion, one of the few areas of the country where it doesn’t have a presence?

Harris Teeter Supermarkets Inc (NYSE:HTSI)While the grocer itself recently said it would be at least six months before it could consider making more acquisitions, a Wall Street Journal article last week suggested The Kroger Co. (NYSE:KR) is on the short-list of candidates to buy up Great Atlantic & Pacific Tea Co., which recently emerged from bankruptcy and also operates the Pathmark, Food Emporium, Waldbaum’s, and A&P chains. While it has a presence in Delaware and Maryland, states that The Kroger Co. (NYSE:KR) is already well acquainted with, A&P, as the corporate giant is more commonly known, is heavily represented in Connecticut, New York, New Jersey, and Pennsylvania, areas that The Kroger Co. (NYSE:KR) – and Harris Teeter Supermarkets Inc (NYSE:HTSI), for that matter — have yet to penetrate.

It’s certainly a rich market to tap. Even the ailing A&P chains had racked up almost $9 billion in sales before entering bankruptcy protection in 2010. But intense competition from mass retailers like Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT), as well as the deep discounters like Dollar General Corp. (NYSE:DG) and Dollar Tree, Inc. (NASDAQ:DLTR) that added food and other consumables to their aisles, cut into performance.

The Northeast is also a high-cost region to operate in, particularly because of labor costs, and it was only because of concessions approved by the heavily unionized chain that A&P was able to be bought by private equity in bankruptcy rather than sold off piecemeal. Add in a series of ill-timed acquisitions such as the 2007 buyout of the Pathmark chain, which itself has been a perennial underachiever, and the addition of a boatload of debt, and A&P has not been a top-notch profit center.

The Journal puts a potential value on A&P at around $1 billion, and also names Stop & Shop parent Ahold as a potential acquirer, as well as P/E firm Cerberus Capital Management, but there are doubts any of the three would actually want A&P at the moment.

As mentioned, The Kroger Co. (NYSE:KR) is still swallowing Harris Teeter and has said it needs time to make more acquisitions. Royal Ahold is also said to be leery about doing large acquisitions these days, while Cerberus recently finished acquiring the Albertsons and Acme chains from SUPERVALU INC. (NYSE:SVU) for $3.3 billion.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!