Harris Teeter Supermarkets recently informed that it has received an offer from two private equity firms interested in buying the chain. Harris Teeter then hired JP Morgan to study its strategic alternatives.
It is estimated that a potential auction of the chain could produce bids ranging between USD 2 billion and USD 2.5 billion and attract many more interested parties.
“In order to fulfill its duty to its shareholders to evaluate opportunities to increase shareholder value, the company retained JP Morgan to assist it in conducting discussions with certain highly qualified parties,” Harris Teeter said in a statement, Supermarket News reports.
The grocer has not specified the names of the interested private equity groups, and noted that it would continue to pursue its ongoing programme to build new stores and run all of its facilities as usual during the review process. The company highlighted that a sale may not come of this process even though it has been exploring the possibility of selling.
According to multiple sources, Kroger and Ahold are companies expected to show interest in a bid for Harris Teeter. Ohio-based Kroger has a history of avoiding large acquisitions, partly due to the high cost of investing in price and the labour needed to adapt a new chain to its standards -- although this issue would not be so relevant with Harris Teeter, said Karen Short, an analyst at BMO Capital.
Jeremy Diamond, a retail analyst based in Baltimore, Maryland, wrote that the most likely scenario is for a competitor to buy Harris Teeter, Charlotte Observer reports.
“The company has a solid store base, caters to a higher household income bracket in most of the neighborhoods where it operates, and would have multiple competitors interested in buying the company,” Diamond wrote in the trade publication Progressive Grocer.
He believes that upscale grocers, including Whole Foods, Wegmans and Ahold could acquire all or part of Harris Teeter.
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