Grocery company Albertsons Cos. is eyeing Sprouts Farmers Market as a new addition to its list of grocery chains. The two grocery companies have entered into a preliminary discussion regarding a potential merger, according to a Bloomberg News report.
The news about the potential merger of Albertsons and Sprouts Farmers Market comes as grocery stores were hit with food deflation in 2016. Competing grocery stores had to fight over food sales, and the recent strategy is to expand organic food offerings.
As always, preliminary talks may actually not result in a transaction. However, if a deal does push through, Sprouts Farmers Market will be added to Albertsons' portfolio under the ownership of Cerberus Capital Management.
While details about the talks are scant, Jefferies Group analyst Christopher Mandeville said Albertsons might have to pay about $26 per share for Sprouts Farmers Market under a merger agreement. However, it is uncertain whether Albertsons will be the winning bidder as merger talks reports usually attract more bidders.
USA Today reported that shareholders had no immediate reaction to the news that Albertsons could buy Sprouts Farmers Market in the future. The pricing of Sprouts shares was virtually unchanged after news outlets published reports about the potential merger.
Albertsons spokeswoman Chris Wilcox said the grocery company does not comment on rumors. If a deal closes, Sprouts Farmers Market will be a sister company of eponymous grocery stores and the Safeway store brand under Albertsons.
To battle price deflation, several grocery companies have been offering heavy discounts to consumers. Organic stores such as Sprouts decide to expand their niche products rather than invest in traditional supermarket products.
Jobs & Hire previously reported that companies use several tricks to get women to buy more of their products. Such tricks include making products smaller and making their products look good online.