CINCINNATI -- Shareholders of Kroger Co. here and Fred Meyer Inc., Portland, Ore., voted overwhelmingly last week to merge the two companies, leaving the industry's biggest merger just one step away from completion.
All that remains for the deal to be completed is approval from the Federal Trade Commission, which is anticipated within the next few weeks, Kroger officials told SN.
Fred Meyer shareholders approved the merger last Monday afternoon by a vote of 99.7% -- with 77.5% of shareholders voting.
The voting came at a special meeting held in southern California at the headquarters of Ralphs Grocery Co., Compton, Calif., which Fred Meyer acquired a year ago. The meeting was held there to accommodate a meeting and dinner of the company's board of directors, chain officials told SN.
The following morning Kroger shareholders also approved the merger at a special meeting here by a vote of 98% -- with 79% of shareholders voting.
Both meetings were perfunctory. The Fred Meyer meeting lasted less than five minutes and, being outside the company's home city, attracted fewer than 20 people, most of them chain executives in town for a company dinner, while the Kroger meeting, held in the company's headquarters city, attracted about 100 people and lasted about 25 minutes, including a formal presentation by Joseph A. Pichler, chairman and chief executive officer, on the benefits of the merger.
Interviewed prior to the Fred Meyer meeting, Robert G. Miller, vice chairman and CEO of Fred Meyer, told SN the two companies are hoping for a resolution from the FTC "within the next few weeks. We are continuing to negotiate with them."
He said the primary overlap between the two companies is in Arizona, where Kroger operates 60 Fry's Food Stores and Fred Meyer operates 56 Smith's stores and 25 former Smitty's units that have been remerchandised and converted to the Fred Meyer banner.
There is also "some minor overlap," Miller noted, in Wyoming and Utah, where Fred Meyer operates Smith's Food & Drug Centers and Kroger operates units of City Markets, based in Grand Junction, Colo.
In other merger news:
Fry's, Kroger's Phoenix-based subsidiary, said it will close its 875,000-square-foot distribution center sometime this summer.
Fry's said that, following the merger, its stores will be supplied out of a 1 million-square-foot facility in Tolleson, Ariz., that was acquired by Fred Meyer in 1997 as part of its purchase of Smith's. Besides supplying Fry's, and Fred Meyer stores in Arizona, the Tolleson facility will also service units of Smith's in Arizona, Nevada, New Mexico and Texas, and Price Rite in Nevada.
According to Dennis Hood, president of Fry's, "Consolidating our facilities, upon completion of the merger, into one centralized distribution center will increase operating efficiency and eliminate unnecessary duplication of services. It will enable us to better serve our customers in the Phoenix area."
The 450 to 500 employees and managers at the Fry's distribution center will be able to interview for jobs at the Tolleson facility, the company said. Fry's said it is in discussions with the Teamsters union, which represents distribution center employees, to address severance packages and retirement options.
Miller said he will relocate to Kroger headquarters in Cincinnati after the merger, where he will be vice chairman and chief operating officer.
"They have an office there for me, and I will commute for a while," he told SN prior to last week's special Fred Meyer meeting. "But while I will spend considerable time there, I will also spend time in Portland, which is only a four-hour flight away."
Miller would be one of six directors being added at Fred Meyer's recommendation to Kroger's board after the merger is completed. The others would be Ron Burkle, chairman of Fred Meyer and post-merger chairman of Kroger's executive committee; Bob Byer, managing partner of Trust Co. of the West, Los Angeles; Bruce Karatz, CEO of Kaufman & Broad, Los Angeles; Carleton Jenkins, CEO of Founders Bank, Los Angeles; and Bruce Rogel, CEO of Weyerhauser.
