Ralphs Shops for Options After New Deal

By KAREN ROBINSON-JACOBS

Aug. 7, 1998 12 AM PT

TIMES STAFF WRITER

The parent of the Ralphs/Hughes supermarket chain, which for six months has been seeking a buyer for 19 Southland stores to satisfy antitrust concerns, now finds itself in the same basket as many consumers--lamenting the dwindling number of choices.

Both Albertson’s Inc. and American Stores Co., owner of the Lucky grocery chain, had been in negotiations to acquire some of the stores that Ralphs and Hughes agreed in February to shed.

“Two of the companies that we were in negotiations with as possible buyers have now become one company,” said Ralphs spokesman Ari Swiller. “So that has thrown a bit of a wrench in what we are doing.”

Swiller declined to comment on the status of the talks with either Albertson’s or Lucky.

The two deals--Albertson’s acquisition of Lucky and Ralphs’ merger with Hughes Family Markets--cloud the future of several overlapping stores, including as many as 24 supermarket locations in Orange County.

What is certain is that five Ralphs stores and one Hughes are for sale in Orange County as part of the deal that Ralphs parent Fred Meyer Inc. reached in February with the state attorney general’s office to ease antitrust concerns.

Less clear is how many of the 18 Albertsons and Lucky stores that are within a mile of each other in nine Orange County cities will survive. The combination of the two chains isn’t likely to raise the same level of anti-competitive concerns as the Ralphs/Hughes deal, primarily because Albertson’s is expected to close some of the stores that overlap with Lucky. Before Monday’s acquisition was announced, Albertson’s had about a 15% share of the Orange County market.

Albertson’s spokesman Michael Read said the Boise, Idaho-based chain is looking at Ralphs and Hughes stores that are not in areas currently served by Albertsons or Lucky stores. He declined to say how many, if any, of the 19 stores fit in that category.

Ultimately, it would be up to the attorney general’s office to determine if a sale to Albertson’s, Lucky or any other potential buyer passes antitrust muster.

A Lucky spokeswoman declined to comment on the Dublin, Calif.-based chain’s talks with Ralphs.

Ralphs, meanwhile, does not have much time to spare in its search for a buyer.

Under the provisions of a court-approved consent decree, Ralphs has until Aug. 27 to present the state with a list of potential buyers for at least 13 of the stores. The remaining buyers must be found by November.

Asked whether Ralphs will be able to meet that deadline, Swiller said: “We’re working with the [attorney general] to do as much as we can as soon as we can. I can’t really comment on a timeline. We’re obviously working with their office daily.”

Staci Turner, a spokeswoman for the attorney general’s office, said if it is determined that Ralphs has made a good-faith effort to find buyers, her office could ask the court to allow Ralphs more time.

Turner said it’s not clear how or even if the Albertson’s acquisition of Lucky will affect the Ralphs sale. She noted, for example, that the potential buyer need not be one of the existing key players in Southern California.

“This opens up the opportunity for [another chain] to come into this market,” she said, citing as an example Raley’s, which has a strong presence in the Sacramento area.

Jack Brown, chief executive of Colton-based of Stater Bros., who has been looking to expand his 112-store chain, said he has been in talks with Ralphs. But he said he is much more interested in any Lucky stores that might be sold.

Turner said the state has no “set-in-cement” requirements for a potential buyer for the Ralphs stores, and requires only that the buyer be “a viable business, to ensure that the supermarket remains open and continues to provide competition in the neighborhood.”

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On the Block

Ralphs/Hughes agreed to sell 19 stores to satisfy antitrust concerns raised by the state attorney general’s office. Six are in Orange County:

Ralphs

1. Costa Mesa

1870 Harbor Blvd.

2. Fountain Valley

8930 Warner Ave.

3. Irvine

8040 S. Culver Drive

4. Laguna Niguel

30252 Crown Valley Parkway