Alpha Beta Will Get Face Lift to Lure Buyer

American Stores, unsuccessful in its initial attempts to sell its Alpha Beta supermarkets, said Tuesday that it plans to make a significant investment in the Southern California chain to help attract a buyer.

The company said Alpha Beta is still up for sale, but industry observers speculated that American Stores is putting that effort on a back burner in hopes that the chain will fetch a better price later.

Under an antitrust settlement reached in May with California Atty. Gen. John K. Van de Kamp, American Stores is required to sell nearly all of Alpha Beta within five years. Van de Kamp sued American Stores after the Salt Lake City company bought Lucky Stores for $2.5 billion in 1988 and sought to merge it with Alpha Beta.

Attorneys for the state contended that the proposed Lucky-Alpha Beta merger, by reducing competition, would have cost California consumers $200 million a year in higher prices.

A spokesman for American Stores, Troy D’Ambrosio, said his company has decided to make “a significant capital investment” in Alpha Beta. He declined to indicate how much will be spent or what improvements will be made.

“We’ve got five years to sell it, and we want to make sure it’s a viable entity,” D’Ambrosio said.

He denied a report in a trade journal, Supermarket News, that Alpha Beta has been taken off the block. However, industry observers noted that the company negotiated to get five years to sell the chain so that it wouldn’t be forced to sell at a low price.

American Stores, industry sources said, sought a minimum price of about $500 million for the package of 152 Alpha Beta supermarkets and nine Lucky outlets it is selling in Southern California.

“Everyone knew it was for sale, and no one came up with their terms,” said Jonathan H. Ziegler, an analyst with Sutro & Co.

Ziegler said it would be difficult for American Stores to get a good price for the supermarkets now because of the national economic slowdown. He expressed mixed feelings about American Stores’ plans to improve the Alpha Beta stores, saying such a move would help fetch a better sales price but would also mean more competition for the nearby Lucky stores.

D’Ambrosio also denied speculation in the Supermarket News article that American Stores might try to renegotiate its settlement with the state Attorney General’s Office after next Tuesday’s election. H. Chester Horn Jr., a deputy attorney general, said he not aware of anything that would suggest American Stores plans such a move.