'Buy and Hold Strategy'? Cerberus Said Eyeing Harris Teeter

NEW YORK — Looking to add to its growing network of regional supermarket chains, Cerberus Capital Management has bid to acquire Harris Teeter Supermarkets, Matthews, N.C., according to reports last week.

The investment firm, which already owns Albertsons, Jewel-Osco, Acme and Shaw’s/Star Market, would consider taking a different approach to the acquisition and likely a different strategy to operating the chain, the Wall Street Journal reported.

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“Cerberus’ model, which has been successful, is to buy distressed assets on the cheap,” Jose Tamez, managing partner in the Denver office of Austin-Michael, told SN. “Harris Teeter does not fit this and is not at a fire sale price. This could be a buy and hold strategy.

“Harris Teeter is very proud of what they have built, and they should be. Similarly, I think they want to proud of who they leave its future in the hands of.”

In the case of its original Albertsons acquisition in 2006, Cerberus partnered with Kimco and other investors to revitalize some of the stores and sell others off for their real estate value, earning tidy profits for all involved, according to Kimco and others.

Harris Teeter by contrast has a strong history of high performance and growth — same-store sales were up 4% last year. Its stock is publicly traded, with market capitalization of $2.33 billion as of last week, up about 30% since the company disclosed it would consider a sale.

Read more: Charlotte's Food Retailing Hinges on Harris Teeter

In structuring a Harris Teeter acquisition, the Journal reported that Cerberus could opt to buy a partial ownership stake and leave the company partly in the hands of its shareholders as a publicly traded company. Cerberus would leave the Harris Teeter management team intact in its North Carolina headquarters.

Supporting the theory of Cerberus’ potential interest in the chain is the fact that Harris Teeter’s chief operating officer — and potential successor to current president Fred Morganthall — is Rod Antolock, an ex-Albertsons executive.

Neither company was available to comment.

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