Cerberus reportedly looking at Harris Teeter

There were a number of reports last week speculating that Cerberus Capital Management may decide to expand its grocery business by bidding on existing supermarket chains. Cerberus led an investor group earlier this year in the purchase of several Supervalu banners, including Albertsons and Acme.

Much of the recent speculation has focused on Harris Teeter, a publicly-traded chain with about 200 stores on the east coast that has been exploring a potential sale for months. Private equity firm Bain Capital has also been rumored to be looking at the chain.

Is Whole Foods a takeover target?

There are often rumors about Whole Foods taking over retail space. Now there is chatter about someone else taking over Whole Foods.

In a recent LiveTradingNews.com story, Paul A. Ebeling, Jr. mentioned that the U.K.'s Daily Mail singled out Kohlberg Kravitz Roberts & Co. and Bain Capital as private equity firms that may have an interest. The two firms have been mum on the subject, though.

Ebeling points to Whole Foods' high profit margins (relative to traditional grocery stores) and high-priced stock as reasons that the company would probably be an expensive play, even to private equity firms that don't have problems raising lots of cash. However, he argues that interest may still be strong, as the company would most likely be valued as a retailer of luxury goods and healthy lifestyles, not merely as a grocery store. And Ebeling thinks Whole Foods' value will continue to increase.

He concludes that Whole Foods "is a leveraged buyout in theory at this time." He adds that we should stay tuned, which of course we will.