DEAL FIRES FIRST SHOT IN ONE-STOP SHOPPING.Byline: Dave McNary Daily News Staff Writer If you think supermarkets are big now, wait a few years. Monday's announcement of Albertson's $11.7 billion buyout of American Stores American Stores was the name of a United States chain of supermarkets. It was formed in 1917 when Acme Markets merged with four other Philadelphia area grocery chains into American Stores. American Stores would grow to 1,700 stores in 40 states with $15 billion in sales. is just the latest sign that smaller grocery stores are passe pas·sé adj. 1. No longer current or in fashion; out-of-date. 2. Past the prime; faded or aged. [French, past participle of passer, to pass, from Old French; see , and that all-in-one stores are the supermarkets of the future. From baked beans baked beans Noun, pl haricot beans, baked and tinned in tomato sauce baked beans npl → judías fpl en salsa de tomate baked beans bake npl to stepladders to fully cooked meals, consumers will soon be able to buy everything they could want without leaving one store, analysts predict. ``We're going to see major players going further and further on selling convenience to customers,'' said retail analyst Patrick Schumann of Edward Jones Edward, Eddie, or Ed Jones is the name of: Edward Jones:
Still, analysts said Albertson's faces a tricky task in taking on the disparate collection of American Stores assets, which include the Lucky, Sav-on, Jewel, Osco and Acme chains. The combined company will have 2,470 stores in 37 states. To compete effectively, all of the company's outlets will have to offer high-end services like florists, bakeries and delicatessens and still provide the deep discounts for commonplace items like detergent, breakfast cereal breakfast cereal, a food made from grain, commonly eaten in the morning. The oldest type of cereal, known as porridge or gruel, requires cooking in water or milk. The modern breakfast cereals, however, are entirely precooked and eaten in cold milk. and videotapes that American Stores' customers are accustomed to. Adding to the pressure has been the expansion of giant discounters like Kmart and Wal-Mart into the grocery business. ``There's a clear trend toward larger stores because one-stop shopping is what customers want,'' said Brian Eisenbarth, an analyst with Collins & Co. ``That's what you're seeing with Wal-Mart and Target.'' Wal-Mart, the world's largest retailer with 1,900 stores, already has a major presence in grocery retailing through its 450 Wal-Mart Supercenters. Chairman David Glass David Glass may be any of the following:
Analysts have pointed out that since the $436 billion grocery business is dominated by small chains, a massive operator like Wal-Mart has solid opportunities because it can beat most rivals' prices with its economies of scale. ``Customers kick a lot of tires these days, so you have to be outstanding to survive in the supermarket business,'' said retail consultant Frederick Marx of Bloomfield Hills, Mich. ``Everybody's already figured out that prepared food, florists and other specialties are where you can make real profits. Standing still is not an option.'' That means the successful operators have to find ways to get rid of duplicative overhead, Marx said. ``The question every operator has to face is, how quickly is Wal-Mart going to come in?'' he said. ``You don't want to wait until Wal-Mart's at your door.'' Some of Albertson's competitors don't appear to be waiting. Business Week reported recently on speculation that Cincinnati-based Kroger may agree to a buyout by Safeway, resulting in a combined company with 2,760 stores in a deal worth about $15.4 billion. MARKET MAKERS The announced merger between Albertson's Inc. and American Stores Co. - parent company of the Lucky and Sav-on chains, among others - will create the nation's largest chain of groceries and drugstores. NAME: Albertson's Inc. HQ: Boise, Idaho “Boise” redirects here. For other uses, see Boise (disambiguation). Boise is the capital and most populous city of the U.S. state of Idaho. It is the county seat of Ada County and the principal city of the Boise metropolitan area. . FOUNDED: 1939 by Joe Albertson Joseph A. "Joe" Albertson (October 17 1906 - January 20 1993) was the founder of the Albertsons chain of grocery stores and a notable philanthropist. Joe Albertson was born in Yukon, Oklahoma, on October 17, 1906. He was one of four sons born to Rhoda and Earl Albertson. as a one-stop shopping market. The company was incorporated in 1945. SALES: $14.7 billion in 1998 vs. $13.8 billion in 1997. NET INCOME (per share): $516.8 million ($2.09) vs. $493.7 million ($1.96). EMPLOYEES: Nearly 100,000. TICKER: ABS NAME: American Stores Co. HQ: Salt Lake City. FOUNDED: By the Skaggs family The Skaggs Family, starting from a small frontier town in southern Idaho, came to have an important impact on merchandising across much of the United States. During most of the 20th century, the Skaggs name became prominent on hundreds of store fronts throughout the West. , with roots in the drugstore business since 1915. In 1979, Skaggs Cos. - a food and drug retailer - merged with American Stores Co. It acquired Lucky in 1988. SALES: $19.1 billion in 1998 vs. $18.7 billion in 1997. NET INCOME (per share): $280.6 million ($1.02) vs. $287.2 million ($0.98). EMPLOYEES: About 120,000. TICKER: ASC ASC Ambulatory surgery center, see there ABOUT THE DEAL The $11.7 billion transaction consists of $8.3 billion in stock and the assumption of $3.4 billion in net debt. Under the deal, American Stores shareholders will receive 0.63 shares of Albertson's common stock for every American Stores share they own. Based on Albertson's July 31 closing price of $48 a share, the acquisition is worth $30.24 per share for American Stores stockholders. Albertson's closed at $48.50, up 50 cents and American Stores rose by $5.3125 to $28.50 - a new 52-week high. Albertson's will issue 172.8 million shares. Following the purchase, American Stores shareholders will own 41.3 percent of Albertson's. Both firms also have the right to buy up to 19.9 percent of each other under certain conditions. The deal will be accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. and is tax-free. Albertson's also expects to take ``significant one-time charges'' as a result of the merger. They could include debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: expenses, employee severance costs and transaction charges. By combining purchasing, distribution and other functions, the new company expects to save at least $100 million in the first year of the merger. In the third year, the company expects to save $300 million annually - $100 million from operational efficiencies and $200 million from reduced overhead, overlapping administrative functions and advertising costs. SOURCE: Daily News research MARKET SHARE A combined Lucky/Albertson's chain will have a slight smaller market share in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. County than Ralph's, which operates the Food 4 Less and Hughes chains in addition to Ralphs. 27.9% Ralphs, 361 stores 22.3% Lucky/Albertson's, 251 stores 18.6% Vons, 203 stores 16.8% Certified Grocers, 348 stores 7.5% Stater stat·er 1 n. A resident of a particular state or type of state. Often used in combination: Lone Star staters; farm staters; the struggle between slave staters and free staters. Noun 1. Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) ., 109 stores 1.3% Trader Joe's, 37 stores 5.6% Other (total stores unknown) SOURCE: Trade Dimensions Market Scope CAPTION(S): 3 Photos, Box, Chart PHOTO (1--Color) no caption (Albertson's supermarket) (2--Color) no caption (Lucky supermarket) (3--Color) no caption (Sav-on drugstore) BOX: MARKET MAKERS (see text) CHART: MARKET SHARE (see text) |
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