Albertson Cos, the Boise grocery-chain operator backed by Cerberus Capital management, has held preliminary talks to merge with Sprouts Famers Market, In. The discussions which took place in recent weeks, are at an early stage and may not lead to a deal. The talks have involved a plan to take organic grocer Sprouts private and add it to Albertsons’ portfolio which included the Safeway store brand. Mergers are becoming more common in the grocery industry, due to an increasingly competitive food retail environment as well as new grocer concepts that have launched in recent years. If a deal does come to fruition, it could also make Albertsons more competitive. Buying a grocer like Sprouts would give Albertsons intel into organic and specialty foods as well as prepared foods. Grocers including Albertsons, Kroger and Wal-Mart have expanded their offerings of organic food in response to changing consumer tasted in recent years. That has put pressure on natural grocers to cut prices to better compete with the mainstream retailers. A sale may attract multiple suitors and lead to a competitive bidding process that could potentially push valuation higher.
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