A report by the Financial Times said that, having failed to sell its Roundy's business, the private equity firm of Willis Stein is now looking to grow through an acquisition of Dominick's Finer Foods.
According to the Financial Times, Willis Stein attempted to auction off Roundy's but found no takers as the credit crunch made potential buyers reluctant to invest the reported $2 billion it was seeking for the chain. The thought is that, with the purchase of Dominick's and a sizeable presence in the Milwaukee and Chicago markets, Willis Stein would be able to attract more suitors.
Roundy's current management team is made up of a number of former Dominick's executives. Robert Mariano, chairman and CEO of Roundy's, once ran Dominick's and recently chided his former company in an interview with Crain's Chicago Business for being another "shade of vanilla" while saying his company was comprised of "entrepreneurs and merchants."
Separately, the Financial Times article reported that Safeway may also be considering a sale of its Canadian business. An unidentified private equity source said the strength of the Canadian dollar made it an opportune time for Safeway to sell the chain, which many believe has limited prospects for growth beyond it core urban locations.
Sobey's and Alimentation Couche-Tard have been mentioned as possible suitors for Safeway's Canadian operations.
Discussion Questions: What do you make of the rumors around Safeway considering a sale of Dominick's and its Canadian operations? Does a sale of these properties make sense at this time? Do you think Roundy's and Dominick's together would be a more powerful combination?