by Karen E. Culp
Springfield's Osco Drug will soon join 10 Springfield-area Smitty's stores as part of the Albertson's group of stores.
Albertson's announced Aug. 3 plans to acquire American Stores Company, which owns retail supermarkets and drug stores that operate under the Acme, Lucky, Jewel, Osco and Sav-on names. American Stores has 31 stand-alone drug stores in the state, and all of them are Osco's, said Michael Read, vice president of public affairs for Albertson's. American Stores does not operate any grocery stores in Missouri.
The company will operate in 38 states as a merged entity. All the stores under the American Stores entity will continue to operate as is, retaining their existing formats and names.
The merger moved Albertson's into the top spot as the No. 1 grocer in size in the country, leaving Kroger behind, said Patrick Schumann, a research analyst for Edward Jones Co. in St. Louis.
"With the current projected annual sales of the merged company being $36 billion, I don't see them holding the No. 1 spot for long," Schumann said.
American Stores had been looking to sell for some time, Schumann said.
"American Stores was lagging and
had been for some time. They had seen declining profits for the past three or
four years. There was talk of the company being sold piecemeal, but it looks as though Albertson's is going to keep it whole, which is a good thing," Schumann said.
The transaction is expected to close in early 1999 and will be followed by a two- to three-year transition period, Read said. Albertson's has expressed that increasing the number of pharmacies it owns is a priority for the company, and this acquisition will do that. Albertson's has about 700 pharmacies and American has 750 stand-alone drug stores.
The transaction has a total value of about $11.7 billion. American Stores Company shareholders will receive .63 shares of Albertson's common stock for each share of American stock they hold. After the merger, American Stores stockholders will own 41.3 percent of Albertson's.
The merger is still subject to shareholder approval and regulatory antitrust review.
The deal is expected to close in the first quarter of 1999, and a savings of about $100 million is expected during that year. The company expects to save up to $300 million over a three-year period, Read said.
Albertson's purchased 10 southwest Missouri Smitty's stores from the Trottier family in March. The company has also broken ground on a warehouse and distribution center in Tulsa, Okla., that will serve the southwest Missouri area.
Albertson's is based in Boise, Idaho, and has 916 stores in 23 states, plus 59 stores pending. American operates 1,558 stores in 26 states and is based in Salt Lake City, Utah.
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