The shares of Sprouts Farmers Market have jumped by more than 20 percent over the past week on speculation that the Phoenix-based chain of organic food stores could be acquired by Albertsons in a deal with potential impact to local shoppers and the companies’ more than 18,000 combined Arizona workers.
A Bloomberg article late Sunday, without naming sources, reported that representatives of the two supermarket chains have held preliminary merger talks. Sprouts stock increased from under $18 a share to around $22 last week, closing Monday at $21.82 a share, down 20 cents a share for the day. The corporation has a stock-market value or capitalization of about $3 billion, placing it among the 15 or so most valuable companies headquartered in Arizona.
Albertsons, which includes the Safeway grocery chain, is owned by Cerberus Capital Management, a private-investment firm with interests in financial services, software, real estate, resorts and many other businesses. Former Vice President Dan Quayle, an Arizona resident, holds a senior leadership position with Cerberus as chairman of the company’s global investments unit.
Both companies have a sizable footprint in Arizona. Albertsons employs just under 15,000 Arizona workers, and Sprouts counts nearly 4,000, according to figures compiled for the upcoming Arizona Republic 100 report of the state’s largest nongovernmental employers, which will be published in April. Kroger Co. operates Fry’s, the largest supermarket chain in Arizona. Notable competitors include Walmart Stores, Amazon.com and Whole Foods Market.
Sprouts has been steadily profitable, earning about $124 million in net income on revenue of $4 billion over the past four quarters. However, a trend of food-price deflation has led to intense competition among retailers.
Sprouts operates 36 stores in Arizona, including a new location in Prescott, which opened last week. The company will unveil its 261st store nationally this week, in La Verne, Calif., said a company spokesman, who declined to comment on “rumors or speculation.” Most Sprouts locations are in Western and Southern states.
Cerberus operates 143 Albertsons and Safeway supermarkets in Arizona.