Albertsons/pettersson/7″/mike1st/mark2nd

No. 30

Albertson’s Buys Lucky Parent

The number of companies left standing in the L.A. supermarket industry shrank further after Albertson’s Inc. agreed in August to acquire American Stores Co., parent of the Lucky supermarket and Sav-on Drugs chains.

The $13.3 billion deal was approved by both companies’ shareholders in December, but still requires final approval from the Federal Trade Commission.

That agency will most likely require the companies to sell off some L.A.-area stores, because both have a big presence in Southern California.

Currently, Albertson’s operates 148 stores in Southern California, out of a total of 916 stores in 23 states. American Stores has 243 Lucky supermarkets and 278 Sav-on stores in Southern California, out of a total of 1,558 stores in 26 states.

After the merger, Albertson’s will be the nation’s second-largest market chain, with annual sales of $36 billion. The only chain bigger will be Kroger Co., which recently agreed to acquire Fred Meyer Inc., parent of Ralphs, creating a chain with $46 billion in annual sales.

In fact, Albertson’s will be one of only three major supermarket operators in L.A. after the merger. The other two are Kroger and Safeway Inc., which has also been on a buying spree.

Driving the consolidation is the fact that larger supermarket chains can command lower prices from wholesalers. While grocery executives argue that those cost savings will translate into lower prices for consumers, some consumer groups fear the consolidation may lead to less choice and higher prices.

Edvard Pettersson