No. 24

Ralphs-Hughes Merger

The number of Southern California supermarket chains is expected to shrink by one, following the November announcement that Ralphs Grocery Co. will combine with Hughes Family Markets in a two-part transaction that also involves Portland, Ore.-based supermarket operator Fred Meyer Inc.

If the deal is consummated later this year, Hughes Markets will be converted to Ralphs stores, consolidating Ralphs’ position as the largest supermarket chain in Southern California.

Ralphs’ market share would grow to 32 percent of the five-county Southern California region, up from the current 28 percent and well ahead of Arcadia-based Vons Inc., the No. 2 chain with 21 percent. Vons is a subsidiary of Pleasanton-based Safeway.

Ron Burkle, chairman of Yucaipa Cos., which owns Ralphs, has said he will make cuts at Hughes’ Irwindale headquarters and distribution center after the deal closes. He said about 100 of the 5,000 jobs at Hughes could also be at risk.

Under the two-part deal, Fred Meyer would acquire both Ralphs and Hughes in two separate transactions, and Burkle would become chairman of Fred Meyer Inc.

Fred Meyer, which also includes the Smith Food & Drug Center chain, would have 818 stores in 14 states and annual sales of $15 billion.