(Oct. 11) CINCINNATI — The Kroger Co.’s proposed acquisition of 18 Raley’s Supermarkets stores in Las Vegas may not come off as smoothly as the company had hoped.
The firm announced in mid-September that it had reached an agreement to acquire the Raley’s markets in an effort to grow its business. At the time, Kroger estimated that the changeover would come within 30 days.
However, a reported Federal Trade Commission probe might delay the transaction.
Chris Van Dyck, senior deputy attorney general with the Nevada Bureau of Consumer Protection in Carson City, said such a review is not unusual, but that it probably would take several weeks, making it unlikely that the acquisition could be finalized by mid-October.
ATTORNEY GENERAL INQUIRY
Nevada Attorney General Frankie Sue Del Papa called for an investigation of the sale in a letter to the FTC, citing concerns that the sale “may have deleterious effects in Las Vegas’ retail grocery markets.”
She said Kroger planned to close three of the Raley’s stores, which, “would constitute a blatant example of output reduction and eliminate jobs in an already stressed economic environment.”
Meanwhile, the Kroger Co. said it is cooperating with the FTC review.
“We are working with the FTC to answer any questions that it may have concerning our plans for the stores,” David Dillon, Kroger’s president and chief operating officer, said in a news release. “We are hopeful that the FTC’s review process will be completed as soon as possible.”
An FTC review of the Las Vegas grocery market is nothing new. The commission reviewed the market three years ago and required Boise, Idaho-based Albertson’s Inc. to sell several stores to Raley’s to win clearance for its acquisition of American Stores Inc. These are the same stores Raley’s now is divesting.
At Raley’s, based in Sacramento, Calif., spokeswoman Nicole Townsend said the decision to sell off the stores came after the company “evaluated its opportunities in Las Vegas and decided to redirect its focus to other areas.”
She said most of the produce buying is done out of Sacramento and that most of the product for the Las Vegas stores is shipped out of the Sacramento distribution center. She said no personnel changes at the produce buying office were planned as a result of the sale.
Raley’s would continue to have a presence in Nevada through its 12 Raley’s markets in Reno.
Besides Kroger and Raley’s, Albertson’s and Vons supermarkets have a strong presence in the Las Vegas area, and Wal-Mart operates at least four of its supercenter stores there. Wal-Mart supercenters offer produce.
SMITH’S, FOOD 4 LESS:
Kroger said the majority of the acquired stores, which average 46,000 square feet, will operate under either the Smith’s or Food 4 Less banner. Smith’s operates 19 stores in Las Vegas, while Food 4 Less has five stores in the area. Two additional stores are under construction and expected to open in November.
As of the end of the first quarter of the 2002 fiscal year, Kroger, either directly or through its subsidiaries, operated 2,429 supermarkets and multidepartment stores in 32 states under approximately two dozen banners.