Merger Eating Away at Possible Buyers of 19 Ralphs/Hughes Stores

The parent of the Ralphs/Hughes supermarket chain, which for six months has been seeking a buyer for 19 Southland stores to satisfy state 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 Fred Meyer Inc. agreed to shed in February when its Ralphs Grocery chain acquired Hughes Family Markets.

But last week, Albertson’s announced plans to merge with American Stores, giving the local supermarket landscape a jolt and putting a question mark on the Ralphs’ buyout talks.

“Two of the companies that we were in negotiations with as possible buyers have now become one company,� said Ari Swiller, vice president of external affairs for Ralphs. “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. A spokeswoman for Lucky had no immediate comment on the Ralphs talks.

Michael Read, a spokesman for Albertson’s, also declined to comment on the status of the talks, but said his chain is still interested in looking at Ralphs/Hughes stores that are not in areas currently served by Albertson’s or Lucky. He did not say how many of the 19 stores fit in that category.

The San Fernando Valley, where Hughes was strongest, and Orange County are the regions with the greatest number of stores to be sold--six each. Two additional stores must be sold in Santa Clarita.

Ultimately, it will 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.

One industry executive commenting on the potential impact of the Albertson’s/Lucky union noted that, beyond clouding the talks with Ralphs, the merger will probably encourage other potential buyers to hold back and see what Albertson’s or Lucky stores come onto the market.

“There will be a pretty good-sized shakeout,� the executive said.

Portland, Ore.-based Fred Meyer, meanwhile, does not have much time to spare in its search for a buyer.

A court-approved consent decree gives Fred Meyer until Aug. 27 to present the state attorney general’s office with a list of potential buyers for at least 13 of its stores. The remaining buyers must be found by November.

Asked whether the company will be able to meet that deadline, Swiller said: “We’re working with the AG to do as much as we can as soon as we can. I can’t really comment on a time line. 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 grant Ralphs more time.

Turner said it’s not clear how, or even if, the Albertson’s merger will affect the Ralphs sale. She noted, for example, that the potential buyer need not be one of the key players already on the Southland scene.

“This opens up the opportunity for [another store] to come into this market where they haven’t been before,� she said, listing as examples Colton-based Stater Bros., and Raley’s, which has a strong presence in the Sacramento area.

Jack Brown, president and CEO of Stater Bros., said he has been in talks with Ralphs. But in a telephone interview he was much more interested in any Lucky stores that might be shed.

Members of the Studio City Residents Assn., who have been outspoken in their desire to bring Vons or an upscale vendor into the Ralphs store at Laurel Canyon and Ventura boulevards, will get an update on the Ralphs/Hughes merger at an association meeting at 7 o’clock tonight at the CBS Studio Center, 4024 Radford Ave.

Tony Lucente, president of the association, said neither Lucky nor Albertson’s scored high in an informal poll of residents’ preferences.

The sale of the Ralphs/Hughes stores can’t come soon enough for Valley consumers who are anxiously awaiting a respite from what they see as a Ralphs-saturated market.

“I have no choice,� said a slightly irate Gerald Marantz of Chatsworth. “I go to Rinaldi and Tampa and that’s a Ralphs. When I go across to Canoga and Devonshire that’s a Ralphs that used to be a Hughes. Mason and Devonshire, Topanga and Roscoe, what do I see? Ralphs.�

“When I have no choice, that’s upsetting to me.�