Albertson’s Pact Raises Stater’s O.C. Presence
Stater Bros. Inc. said Tuesday that it will nearly double its presence in Orange County by acquiring 14 supermarkets as Albertson’s Inc. unloads 145 stores in the West to win approval of its $9.8-billion acquisition of American Stores Co.
In all, 20 Albertsons, Lucky or Max Grocery stores in Orange County are changing hands. Commerce-based Certified Grocers of California will buy four stores, while Vons Cos. and Ralphs Grocery Co. will get one each. The deal will give Colton-based Stater Bros. 30 stores in Orange County.
The divestiture of stores will significantly alter the competitive landscape in many parts of Southern California, allowing two of the state’s largest supermarket chains to move into new territory and giving independent operators new stores in prime urban locations.
Albertson’s on Tuesday agreed to divest 117 stores in California in order to win antitrust approval of its planned acquisition of American Stores, which owns Lucky and SuperSaver stores. Twenty-eight more stores are being divested in New Mexico and Nevada.
The deal, which will create the nation’s second-largest grocery chain, with 2,400 stores in 38 states, raises concerns among some observers over increasing consolidation in the supermarket business, resulting in fewer choices for consumers.
The sale is the largest ever required of a retailer by the Federal Trade Commission and is the last remaining hurdle for the merger of the two grocery giants, which was announced last August. The acquisition is expected to be complete by midnight tonight.
Under the terms of the agreement with the Federal Trade Commission and state attorneys general, 31 stores will be sold to Certified Grocers, which will in turn sell those stores to its membership of independent grocery chains including Gelson’s, Jon’s and Top-Value; 27 will be sold to supermarket operator Raley’s Inc.; 40 stores will be sold to Ralphs; 43 stores and one site will be picked up by Stater Bros.; and four stores will go to Vons. All of the stores must be divested within the next four months, according to FTC guidelines.
The sales will provide the biggest boost to Stater Bros, now located mainly in the Inland Empire. The purchases will increase its size almost 40%, giving it a much larger presence in Orange and Los Angeles counties.
“We’ll go from a company with $1.9 billion in annual sales to $2.4 billion in just 90 days,” said Jack Brown, Stater Bros. chief executive. “This will give us much greater purchasing power.” The chain will begin converting the stores to the Stater Bros. format in 45 days.
Stater Bros. has been looking “very closely” at Orange County since October, when its newest store opened in Laguna Woods, setting an all-time sales record during its five-day grand opening period, Brown said.
“It’s a terrific market for us,” he said of Orange County. “Our average store sales have gone up faster [there] than any of our other districts over the past four years.”
The new stores generally will be about a mile or two from other Albertsons or Lucky stores, Brown said. They will be remodeled as needed, but all stores will remain open during the transformation.
Stater Bros. generally offers more brand-name products and fewer generic brands than other Southern California chains. To woo customers, Stater Bros. will stock the stores with products now offered in both stores, Brown said.
Since most of the Albertsons and Lucky stores are larger than Stater Bros., the newly acquired outlets can accommodate the additional merchandise, he said. On average, Albertsons stores are about 43,000 square feet, Lucky stores are about 40,000 square feet and Stater Bros. are about 32,000 square feet.
Stater Bros. has been renovating its aging stores in Orange County, but that process will stop as the company concentrates on remodeling its new stores over the next nine months, Brown said. None of the existing Stater Bros. stores will close as a result of the acquisitions.
Brown said the approximately 4,000 employees at the stores Stater Bros. is purchasing will be able to keep their jobs, wages and seniority. All are represented by the United Food and Commercial Workers Union.
Indeed, Albertson’s spokesman Michael Read said employees of all divested stores will probably be offered jobs by their new owners. “There will be very little job loss as a result of these divestitures,” Read said.
Ricardo Icaza, president of UFCW Local 770, which represents the employees of all of the supermarket chains involved in the deal, said that while there will be no layoffs, the current trend of larger supermarket chains hurts competition.
“With a smaller number of chains with more stores, there is less and less competition, both for consumers and for employees,” he said. “Albertson’s and Ralphs, all the stores pay the same and give the same pensions. Having only three or four chains spells the end of true competition.”
For Ralphs, the divestiture will give it a greater presence in Northern California, where the company operates about 20 Cala, Bell and FoodsCo markets. Ralphs, which is owned by Cincinatti-based Kroger Co., will pick up 31 stores in the Bay area. It will operate all of the California stores except three under the Ralphs name. The remaining stores will become FoodsCo warehouses, spokesman Terry O’Neil said.
Albertson’s will pay $9.8 billion in stock and assume $3.4 billion in debt to acquire American Stores. The large number of stores to be sold in the divestiture makes it a much costlier deal, analysts say.
When Albertson’s announced the acquisition last August, the chain was expected to shed about 80 stores to satisfy regulators. But, as the waiting period for FTC approval dragged on, many raised that estimate closer to 120 stores.
“It was a little bit of a setback,” said Patrick Schumann, a grocery analyst with St. Louis-based Edward Jones. “But I think they may have been a little bit conservative on the cost side when they announced this. I’m still excited about the company’s prospects going forward.”
Albertson’s shares fell $1.56, to $54.38, in New York Stock Exchange trading Tuesday.
Times staff writers Ryan Cormier and Greg Hernandez contributed to this story.
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Stater expands
Twenty Albertson’s or Lucky supermarkets in Orange County are being sold as part of the Albertson’s $9.8 billion acquisition of Lucky. Stater Bros. is acquiring 14 of thee store. Here’s a look at the stores being sold, and their buyers.
City: Anaheim
Store: Albertson’s
Owner: Albertson’s
Buyer: Stater
Address: 610 S. Brookhurst
*
City: Anaheim
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 1131 State College Blvd.*
City: Buena Park
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 7511 E. Orangethorpe
*
City: Costa Mesa
Store: Albertsons
Owner: Albertson’s
Buyer: Vons
Address: 2701B Harbor Blvd.
*
City: Cypress
Store: Altersons
Owner: Albertson’s
Buyer: Stater
Address: 10051 Valley View
*
City: El Toro
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 22351 El Toro Rd.
*
City: Fullerton
Store: Lucky
Owner: ASC
Buyer: Stater
Address: 333 N. Euclid Ave.
*
City: Fullerton
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 1040 E. Bastanchury Rd.
*
City: Garden Grove
Store: Max Grocery
Owner: Albertson’s
Buyer: Certified
Address: 12891 Harbor Blvd.
*
City: Huntington Beach
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 10114 Adams St.
*
City: Huntington Beach
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 7101 Warner Ave.
*
City: La Habra
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 851 N. Harbor Blvd.
*
City: Laguna Beach
Store: Albertsons
Owner: Albertson’s
Buyer: Ralphs
Address: 700 S. Coast Hwy
*
City: Laguna Hills
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 26892 La Paz rd.
*
City: Orange
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 3325 E. Chapman Ave.
*
City: Placentia
Store: Albertsons
Owner: Albertson’s
Buyer: Stater
Address: 1111 E. Imperial Hwy.
*
City: San Clemente
Store: Albertsons
Owner: Albertson’s
Buyer: Certified
Address: 602 El Camino Real
*
City: San Clemente
Store: Lucky
Owner: ASC
Buyer: Stater
Address: 816 Camino de los Mares
*
City: Santa Ana
Store: Albertsons
Owner: Albertson’s
Buyer: Certified
Address: 1720 E. 17th St.
*
City: Westminster
Store: Max Grocery
Owner: Albertson’s
Buyer: Certified
Address: 15300 Golden West
Source: Albertson’s
