Sprouts Reportedly in Merger Talks With Albertsons

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Sprouts Farmers Market (NASDAQ: SFM) might soon be scooped up by an eager shopper, if recent media reports are accurate. Bloomberg, citing “people with knowledge of the matter,” broke the news Sunday that the grocery store chain operator is in talks with privately held Albertsons regarding a merger.

A deal would see Albertsons purchasing Sprouts, and adding to a portfolio of supermarket brands that already includes its eponymous flagship chain, Safeway, and Acme Markets, among other familiar grocery retail sector names.

The Albertsons/Sprouts discussions have taken place in recent weeks, Bloomberg said. The article’s sources said that talks are still at an early stage, and so might not ultimately result in a deal.

Neither company has publicly commented on the report.

Albertsons is an eager and active dealmaker. Its most recent big-ticket acquisition was for Safeway, the prominent California-based supermarket chain. That $9.2 billion merger was agreed to in the summer of 2014, and completed the following January.

Grocery operators have faced significant challenges recently. Deflation in the prices of key food items has impacted revenue and profitability, and consequently the popularity of their stocks. Over the past year, Sprouts’ share price has declined by nearly 27%, not far from the 24% fall of fellow supermarket operator Kroger. Whole Foods Market, Sprouts’ closest stock market competitor in the healthy-grocer segment, has seen a nearly 11% drop across that stretch of time.

Sprouts’ stock price was largely unchanged in the wake of the Bloomberg report; it closed down less than 1% Monday, the day after the article was published.

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Source: Investopedia