State Sues to Block Takeover of Lucky Stores

State Atty. Gen. John Van de Kamp filed a federal lawsuit in Los Angeles on Thursday to stop the pending merger of Lucky Stores with the Alpha Beta grocery store chain, claiming it would violate antitrust laws.

In a suit filed in U.S. District Court, Van de Kamp and the state of California seek a temporary restraining order halting the merger until a full trial can be held. A date for the hearing has not been set.

The lawsuit said the state was filing under a legal theory called parens patriae, or on behalf of its residents, to “protect the economy of the state.”

The state filed the action on its own behalf as well, the suit said, because it believes that the move will hinder competition and because it is a purchaser of products sold to the two stores and their competitors.

The effect of the Lucky and Alpha Beta merger is likely to “substantially lessen competition” and result in higher food prices, the lawsuit said.

A Major Transaction

The suit names as defendants American Stores Co., which is based in Salt Lake City and is the parent company of Alpha Beta; Alpha Beta Acquisition Corp., a wholly owned subsidiary formed for the Lucky takeover, and Lucky Stores Inc., based in Dublin, Calif.

It said American’s $45-per-share takeover offer for all of Lucky’s outstanding stock March 22, which was increased to $65-per-share May 17, had to be scrutinized because it is a “major transaction in interstate commerce with a value in excess of $2.5 billion.”

On May 20, Lucky agreed to merge with American, the lawsuit said, and American has since acquired more than a majority of Lucky’s outstanding common stock.

“The acquisition, if consummated, would give American control of Lucky and permit it to combine Lucky’s approximately 340 California supermarkets with American’s approximately 240 Alpha Beta supermarkets in California,” the suit said.

The lawsuit said examination of the merger is important because it is “but one of two enormous supermarket industry mergers now under way.” It cited a Dec. 3, 1987, agreement by Vons to buy the stock of four subsidiaries of its competitor, Safeway.

Among the Safeway assets included in that transaction are 172 supermarkets along with warehouses, distribution and processing centers. Vons operates 183 markets in Southern California, the suit said.

American Stores said in a statement that the suit was “not unexpected” but added that it had not yet reviewed the filing.