Dive Brief:

• Reuters reported that Albertsons Cos. is in advanced talks to acquire Price Chopper for approximately $1 billion, according to Supermarket News.
• Price Chopper has leading market shares in the Albany-Schenectady and Glens Falls, N.Y. markets, and No. 2 positions in Binghamton, N.Y.; Utica-Rome, N.Y.; Pittsfield, MA; Worcester, MA; and Burlington, VT, according to Metro Market Studies. If the deal does happen as expected, the acquisition would solidify Albertsons’ East Coast base and fill a gap between its Pennsylvania-based Acme and Massachusetts-based Shaw’s brands.
• Albertsons has become a major industry consolidator, acquiring large publicly traded companies like Safeway and family-run regionals alike in recent years.

Dive Insight:

Albertsons, which is controlled by private equity firm Cerberus Capital Management LP, operates more than 2,200 supermarkets and is the second largest U.S. grocery chain after Kroger. Price Chopper operates about 130 stores across the Northeast in New York, Connecticut and Massachusetts. 

If the deal goes through, it would be the latest in a string of U.S. grocery store consolidation, as chains struggle with the challenge of competing against big box stores and online retailers such as Amazon.

Last year, Albertsons combined with Safeway in a $9.2 billion merger that expanded its presence in the central and western U.S.

Supermarket industry analyst David Livingston, head of DJL Research, said that Price Chopper has experienced a lot of problems over the last few years. Golub Corp., Price Chopper’s corporate owners, have spent 2016 working on its ongoing plan to transform its 135 stores to the company’s new Market 32 format, under the leadership of new CEO Scott Grimmett, the first leader outside of the Golub family in its 84-year-history.

“They made a big mistake trying to expand in Connecticut,” he told Food Dive. “Second, as they saw themselves decline in the existing market, they tried to reinvent themselves with this Market 32 Format, which apparently isn’t working. They’re going in the wrong direction and in order to get the value for the owners, now is probably the time to sell.”

Livingston believes Albertsons would come and most likely halt any big changes.

“They do have experience in buying distressed companies but they’re not one to really invest a lot of money back into the stores; they like to make their money on reducing expenses,” he said. “I wouldn’t expect a lot of Cap-Ex going back in the stores like Price Chopper was planning on doing.”