retail news in context, analysis with attitude

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There were a couple of stories yesterday about which there are additional notes that should be made...

• Supervalu announced that it will acquire Unified Grocers for $375 million - $114 million in cash, and the assumption of $261 million in debt. But Reuters reported yesterday that under the terms of the deal, Supervalu would "receive a termination fee of $8 million plus reimbursement up to $1 million in costs, if deal is terminated by Unified Grocers." In other words, if the deal is vetoed by Unified's owner-members, they will have to write a check for up to $9 million.

In the event that federal regulators prevent the acquisition, Supervalu would have to pay a reverse termination fee of $9.5 million to Unified.

One source close to Unified told MNB that the potential of having to write a check in that amount almost certainly would influence how those owner-members cast their votes. Based on my conversations, there doesn't seem to be much chance that Unified will reject the offer, but that doesn't mean that there aren't a number of retailers concerned that their levels of service will decline once they are absorbed into what they feel is a highly centralized Supervalu machine.

And, as one person pointed out to me, at least part of the problem is the debt that Unified incurred during the Haggen debacle - and that Haggen has managed to claim yet another victim.

• The Charlotte Observer notes that as activist hedge fund Jana Partners takes a significant position in Whole Foods and pushes for organizational change, it has called for the election of new members of the board of directors. One of those suggestions - Thomas “Tad” Dickson, the former CEO of Harris Teeter, who led the company "from February 1997 until the Matthews-based grocery store chain was sold to Kroger in 2014. Dickson’s primary business now is private investing, Jana said in its filing."

Bloomberg reports that before Jana Partners made its investment in Whole Foods, Amazon was seen as a possible bidder for Whole Foods, and "pondered a takeover of the organic-food chain last fall but didn’t pursue a deal, according to a person with knowledge of the situation.

"The e-commerce giant considered internally whether Whole Foods would help invigorate its nearly decade-long push into groceries, said the person, who asked not to be identified because the deliberations were private. The discussions never turned into a concrete plan, according to the person.

I find this one really hard to believe. I mean, I can imagine that the possibility might've come up at a meeting, or at a Seattle bar somewhere, but I cannot imagine it got very far. I just don't see how an Amazon acquisition of Whole Foods makes any sense at all.
KC's View: