Buyout Firms Going Retail

Albertson's, The Sports Authority, Burlington Coat Factory Warehouse agree to be acquired.
Stephen TaubJanuary 23, 2006

In the past week, several buyout firms have agreed to shell out a total of nearly $21 billion for three well-known brand names.

By far the biggest deal is Monday’s agreement by Albertsons Inc. to sell the entire food and drugstore company to a consortium of investors for about $17.4 billion in cash, stock, and assumed debt.

The group, led by Cerberus Capital Management, includes Supervalu Inc., which will acquire more than 1,100 stores and other assets; CVS Corp., which will acquire approximately 700 freestanding drugstores as well as a distribution center; as well as Kimco Realty, Schottenstein Realty, Lubert-Adler Partners, and Klaff Realty.

Under the agreement, Albertson’s shareholders will receive $20.35 in cash and a 0.182 shares of Supervalu stock for each Albertsons share. The deal is expected to close in the middle of this year.

Also on Monday, The Sports Authority Inc. announced that it agreed to be acquired by an investor group led by Green Equity Investors IV LP — an affiliate of Leonard Green & Partners LP that includes members of Sports Authority’s senior management team — for about $1.3 billion, including assumed debt.

“As a private company, Sports Authority will have greater flexibility to accomplish its long-term goals,” stated Doug Morton, chairman and chief executive officer of the retailer. “Leonard Green & Partners has an excellent track record of building value at its portfolio companies by providing strong financial and strategic support,” he noted, as well as significant experience in the industry “from its prior ownership of several sporting goods retailers.”

And last week, Burlington Coat Factory Warehouse Corp. agreed to be acquired by affiliates of Bain Capital Partners LLC for $2.06 billion in cash.