We reported about it nearly six months ago and now it appears that Schenectady, NY-based Golub Corp. (Price Chopper) is close to selling its 84-year-old regional grocery chain.
The reported buyer is Albertsons, which we speculated would be the leading candidate to acquire the family-owned grocer.
Several sources, including those from the financial community, have told us that barring a setback, the deal could be officially announced in late January and then would face several months of government scrutiny. However, this a relatively clean deal with some overlapping stores around Worcester, MA and a few other conflicting locations in Northern New England.
For Albertsons, purchasing Price Chopper would continue its pathway to acquiring large retail entities which began in 2013 when it bought Acme, Jewel, Shaw’s and Albertsons bannered stores on the West Coast. It added to its portfolio with the 2015 purchase of Safeway and by acquiring about 75 former A&P stores later that year. With about $60 billion in annual revenue, Albertsons is looking to reach the $100 billion sales plateau by 2020 and also to leave the ownership of PE firm Cerberus Capital Management and launch its own public offering next year.
Price Chopper, which was founded in 1932, had issued a prospectus about nine months ago utilizing New York investment bank Sagent Advisors to oversee the process (Sagent has done many grocery transactions and was involved the in recent Albertson’s deals involving United Supermarkets and Haggen).
Multiple sources also told us that the one of the primary challenges in selling Price Chopper was a $300 million underfunding in its pension plan which any new buyer would have to absorb.
After more than 80 years of Golub family leadership, the regional chain made a key managerial shift earlier this year when it named Scott Grimmett CEO of the company. Former chief executive Jerel “Jerry” Golub was moved to vice chairman. The company’s patriarch and former CEO, Neil Golub, remained chairman. Grimmett joined Price Chopper in 2012 as executive VP and COO after a 37 years career at Safeway.
That Price Chopper has been exploring a sale of its company isn’t that surprising. Like many conventional supermarket operators, particularly region chains, the fiercely competitive and diverse landscape has created competitive and financial challenges. In the past two years, Price Chopper began a new upscale more perishables-oriented format, Market 32, to differentiate itself from its competitors. Currently there are 10 Market 32 locations in New York, Massachusetts and Connecticut.
The retailer, which operates stores in Connecticut, Massachusetts, New Hampshire, New York, Pennsylvania and Vermont, employs 22,000 associates who collectively own 47 percent of the company’s privately-held stock. Price Chopper’s annual sales are estimated to be $3.6 billion for its approximately 135 stores. Reuters said that Albertsons would pay in the range of $1 billion to complete the transaction.
