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Cerberus Capital set for big payday from Kroger’s $24.6bn deal for Albertsons

Cerberus Capital Management and a consortium of real estate investors are in line for a big payday if Koger’s proposed $24.6 billion acquisition of rival US grocery retailer Albertsons is cleared by regulators, according to a report by the Financial Times.

Kroger has agreed to acquire Albertsons in a deal that would create one of the largest US supermarket chains but only if it passes significant antitrust hurdles. It has agreed to pay $34.10 per Albertsons share, an almost 33 per cent premium to the group’s share price as of 12 October. The price includes $4.7 billionn in debt.

The deal will also see Albertsons will pay a special cash dividend of about $6.85 per share, worth about $4 billion, to its shareholders this year, with that figure being deducted from the overall cash offer.

The Cerberus-led consortium first acquired 655 Albertsons  stores and 100 distribution centres in 2005. In 2013, the group bought hundreds of grocery stores from ailing Supervalu for just $100 million in equity and the assumption of $3.2 billion in debt. In 2014, the portfolio of grocers, named Albertsons, acquired Safeway for $9.7 billion, a deal it financed with nearly $8 billion in debt.

If the deal proceeds, Cerberus will receive $5.2 billion for its Albertsons shares, a return of many multiples on its initial investment.

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