Albertsons Cos. has invested an undisclosed amount in Texas-based grocery store chain El Rancho Supermercado. The deal directly follows Albertsons’ acquisition of meal-kit provider Plated in September.

“El Rancho has built a great business with its 16 Texas stores, and we’re confident that we’ll be able to leverage our combined expertise to better serve customers across the existing Albertsons Companies’ and El Rancho store bases,” states Albertsons CEO Bob Miller. “With El Rancho’s own distribution and manufacturing facilities serving their Texas stores, we can share best practices that will reduce costs and benefit our customers.”

El Rancho, based in Garland, Texas, will continue to operate as an independent company as part of the deal. The transaction deals Abertsons a stronger hand in the fast-growing Latino grocery sector. The U.S.-based grocery retailer operates a plethora of food and drug stores using a variety of branded names, including: Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen and Carrs.

Grocery store chains are facing intensified competition from online meal companies and are feeling heat from Amazon.com Inc.'s (Nasdaq; AMZN) acquisition of Whole Foods. In other deals, Nestlé USA bought a minority stake in online meal provider Freshly in 2017, and Grubhub Inc. (NYSE: GRUB) has agreed to acquire Yelp Inc.'s (NYSE: YELP) Eat24 online food delivery business.

Peter J. Solomon Co. served as financial adviser to El Rancho, while Simpson Thacher & Bartlett served as legal counsel. Schulte Roth & Zabel served as legal counsel to Albertsons.

A shopper loads her purchases into a vehical outside an Albertson's supermarket in San Diego, California. Albertsons acquired grocery store chain El Rancho Supermercado in November.
A shopper loads her purchases into a vehical outside an Albertson's supermarket in San Diego, California. Albertsons acquired grocery store chain El Rancho Supermercado in November. Bloomberg News
Kamaron Leach

Kamaron Leach

Kamaron Leach joined SourceMedia in 2016, serving as Reporter of Mergers & Acquisitions. Kamaron writes the Finance Finesse column about investment banking and lending, and also covers the media and entertainment sector.