NEW YORK -- Albertson's said last week its pending merger with American Stores Co., Salt Lake City, is on schedule to be completed within the next few months.
According to Dick King, president and chief executive officer of the Boise, Idaho-based chain, the company is in phase two of its three-phase integration process, having completed "discovery" and moved into "planning," with "implementation" ready to roll the day the merger is completed.
King spoke at last week's annual Food & Drug Retailing Conference here, sponsored by locally based Donaldson Lufkin & Jenrette.
According to King, the merger is still under review by the Federal Trade Commission and the state attorneys-general in California and New Mexico, where the two companies have overlapping operations.
King declined to comment on possible divestitures in either state, explaining, "It's better for us to keep our relationships with the FTC and the states candid and not to make comments about divestiture."
In addition to outlining the process of merging the two companies, King and A. Craig Olson, executive vice president of finance and chief financial officer, made these points during their presentation:
The acquisition of two of the American Stores properties -- Acme Markets in the Philadelphia area and Jewel Food Stores in the Chicago area -- will serve as "beachheads" for further Albertson's penetration into adjacent urban markets, King said.
No decision has been made on whether Albertson's will continue to offer a frequent-shopper card program, now available at stores operated by American, after the merger.
"We're pleased with our own bonus-buys program," King said, "and we believe a real key to our success is our ability to give values to all customers.
"But with the merger, we must look at the card program, and we're doing that now. We're looking at the benefits, but we feel the instant gratification of the bonus-buys program is something we want to maintain."
Asked how quickly Albertson's might pursue another large acquisition after the American Stores deal is completed, Olson replied, "We're learning a lot through this process about how to manage change, and that will help a lot in the future as other things become available.
"We plan to continue to look aggressively [for additional acquisitions], but you never can predict the timing of such things."
King said Albertson's does not contemplate any change in its acquisition strategy going forward. "We're looking for fill-in acquisitions like Buttrey [Food & Drug Stores Co., Great Falls, Mont., whose acquisition Albertson's completed late last year], as well as for new-market entries. And size doesn't matter -- we will look at large and small companies."
Reviewing the process of merging the two corporate giants, King said the discovery phase, completed in mid-November, involved taking nine corporate functions and formulating 68 projects. The nine functions were distribution/procurement, finance, human resources, real estate, retail operations, information systems/technology, pharmacy, merchandising/marketing and legal.
He said 190 people from both Albertson's and American Stores spent 45 days together sharing values, systems and other aspects of each company "to ensure that decision-making [in the combined company] stays close to the customer and to focus attention on what's best for the customer."
After completion of the initial phase Nov. 14, King said, the results were presented to the Albertson's integration committee over four days in late November. Recommendations on combining the two companies' business and technical systems were discussed, "to get the process of substantiating costs and deriving synergies under way," he noted.
He said the two companies are currently in the planning phase, preparing to implement recommendations that will be set by a steering committee comprised of King and other top officials of Albertson's and American Stores.
