Reports in the Wall Street Journal have surfaced saying NC-based retailer Harris-Teeter has been approached by two private equity firms about a possible takeover.
According to the article, BMO Capital Markets retail analyst Karen Short has told investors that the likeliest candidate for acquiring the chain’s 211 stores is Dutch conglomerate Ahold, who already owns the Giant and Stop & Shop chains based in the Northeast, Pennsylvania, Delaware, Maryland and Virginia.
Ahold also owns Peapod, the online grocery delivery division. Its most recent revenues were €30.27 bn ($40bn); Harris-Teeter has a market value of $2.1bn according to the Journal.
Adding Harris-Teeter through a private equity fund leveraged buyout would extend the company’s reach down the Eastern Seaboard to Florida, putting them in direct competition with one of the other likely players in a PE buy-out of the company, Publix Super Markets Inc.
The other logical candidate is Kroger Co.
Publix is the leading grocery retailer in the Southeast, and is consistently voted one of the country’s top supermarket chains. So its buying Harris-Teeter would eliminate a regional competitor. Kroger has stores in the Southeast, but is strongest in the Midwest, and has not used acquisitions as an expansion strategy recently.
Taking over Harris-Teeter would allow an expanding Ahold to go toe-t0-toe with Publix from a base of stores with an more upscale reach and clientele. Harris-Teeter ranked 34th in Supermarket News‘ most-recent annual ranking of US grocery retailers with sales of $4.3bn in its last reported fiscal year.