Stop Shop owner reportedly interested in Harris Teeter
Harris Teeter Supermarkets Inc., the Matthews, N,C, based grocery chain exploring a sale, has attracted interest from Royal Ahold NV, the Dutch owner of Stop Shop stores, said people with knowledge of the matter.
Ahold has contacted JPMorgan Chase Co., retained by Harris Teeter to evaluate options, and is seeking more information on the sale process, said one of the people, who asked timberland uk not to be named because the negotiations are private. Ahold hasn’t made a formal bid, according to that person.
“We regard Harris Teeter as a likely deal for Ahold,” Patrick Roquas, an analyst at Rabobank, wrote in a report today. A transaction wouldn’t hurt Ahold’s stock as it’s unlikely that the Amsterdam based company is willing to put its “credible track record at risk” by paying too much.
[Harris Teeter operates numerous supermarkets across the Triangle.]
Harris Teeter’s market value tops $2 billion.
Ahold “appears to have more than adequate capacity on its balance sheet to complete a transaction,” she said in a Feb. 20 research note. She timberland uk also listed Lakeland, Florida based Publix Super Markets Inc. and Cincinnati’s Kroger Co. as possible suitors.
Harris Teeter shares advanced 1.5 percent to $42.12, the highest price in more than six months, at the close yesterday in New timberland uk York. in Amsterdam. The stock has gained 8.5 percent this year.
Harris Teeter disclosed this month that it hired JPMorgan after receiving advances from two private equity firms, which the company didn’t name. Representatives at Harris Teeter, JPMorgan and Publix declined to comment, while a spokesman for Ahold said the company doesn’t comment on market rumors. An official at Kroger didn’t immediately return a call seeking comment.
Harris Teeter wa timberland uk s co founded in 1960 by two North Carolina grocers, according to its website. The company reported $4.54 billion in revenue for the year ended Oct. Grocery companies typically sell at 7 to 10 times Ebitda, said one of the people familiar with the situation, indicating Harris Teeter’s sale value could be as much as $3.1 billion.
Some brokerages including Barclays expressed skepticism that Ahold would buy all of Harris Teeter, suggesting that returning proceeds from the ICA deal to shareholders would be a better option than buying a grocer that competes against grocers including Wal Mart Stores Inc.
“We have already assumed in our model that Ahold will return the ICA proceeds to shareholders in the second half via a share consolidation,” Barclays analysts, including James Anstead in London, said in a note. “If the cash was instead spent on significantly increasing Ahold’s exposure to an industry which is undoubtedly competitive, then we would expect shareholders to be unimpressed.”
Despite its slogan “Great Food. Low Prices. Friendly Service,” Stop Shop received only slightly above average marks when it came to cleanliness, but mediocre scores on price, the quality of meat and produce, and service, which is to say, they’re not necessarily doing anything wrong, but they’re not doing much right.