10.fredmeyer/booth/dt1st/mark2nd

No. 10

Kroger Buys Fred Meyer

The consolidation of L.A.’s supermarket industry came to a head in October when Kroger Co. agreed to buy Fred Meyer Inc. in an $8 billion deal.

While Fred Meyer is based in Portland, Ore., it is majority-owned by L.A. supermarket magnate Ronald Burkle, the company’s chairman. Fred Meyer is the biggest owner of area supermarkets, including Ralphs, Food 4 Less and Hughes.

The merger will solidify Kroger’s position as the nation’s largest grocery chain, with 2,000 stores reaching from California to the East Coast, and sales of around $43 billion.

The Kroger deal is the latest in a wave of mergers sweeping the supermarket industry, which is in the midst of cutting costs in order to compete against low-price retailers like Wal-Mart and Kmart.

The consolidation has raised concerns among local consumer activists who maintain that less competition will result in higher prices. But Burkle’s past deals have resulted in little interference from regulators beyond requirements that he sell off a few individual stores.

Few have ridden the wave of corporate consolidation as deftly and profitably as Burkle. Getting his start in the grocery business as a box boy in a suburban Los Angeles market, Burkle has made himself a billionaire through his heavily leveraged purchases and sales of supermarket chains.

With the sale to Kroger, Burkle’s net worth is estimated to have risen to around $1.7 billion, raising the expectation that he will be engaged in some serious dealmaking in 1999.

Jason Booth