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NEW YORK CITY-Analyst notes this week question how an acquisition of grocery giant Albertsons would be structured after recently published reports said the retailer is changing hands for $16 billion. Reports say that retail REIT Kimco Realty Trust, grocer Supevalu and private equity firm Cerberus Capital Management will buy Albertsons in a joint venture.

Meanwhile, it was also reported that drugstore chain CVS would pay $4 billion of the total to acquire Boise, ID-based Albertsons’ 700 Osco and Sav-On stand-alone drugstores. The report threw Lehman Bros. retail analyst Meredith Adler, who had Albertsons’ drugstore business valued at $1.9 billion.

In a report, she speculates that a breakup of Albertsons is the most likely scenario in the event of a takeover since the company’s portfolio of stores performs inconsistently across different regions. For example, the grocer performs well in Chicago, Las Vegas and Philadelphia, she says, but struggles in Dallas, Denver and Florida. “We see challenges for anyone trying to operate a downsized [Albertsons]…given the deleveraging effect on corporate overhead and the loss of buying clout with vendors,” she adds.

A UBS Investment Research report on the ramifications for New Hyde Park, NY-based Kimco points out that Albertsons owns about 60% of its real estate, accounting for about 57 million sf. “We believe that a large sale and leaseback deal may be difficult to achieve due to the large amount of space, and when considering [Supervalu] may not wish to continue to operate in many of the markets where the company currently operates owned stores (notably Dallas),” the report says.

Albertsons operates 2,476 units under the Albertsons, Acme, Bristol Farms, Jewel-Osco, Osco Drug, Sav-on Drugs, Shaw’s, Star Market and Super Saver names. The company’s executives did not comment on a possible sale during their latest earnings call.

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