CINCINNATI -- Kroger Co. here said last week it has agreed to purchase 74 supermarkets in Texas and Oklahoma from Winn-Dixie Stores, Jacksonville, Fla.
Sixty-nine of the stores are in Texas, primarily in the Dallas-Fort Worth metropolitan area, a highly competitive market that can be expected to become even more competitive as Kroger increases its presence there, and as Wal-Mart Stores, Bentonville, Ark., prepares to test its new small-store Neighborhood Market concept there as well. (See Newswatch, Page 2.)
Gary Giblen, New York-based managing director of Banc of America Montgomery Securities, San Francisco, said, "It's a good move that will strengthen Kroger's market share." He added that the proposed acquisition would make Kroger the largest supermarket company in Fort Worth and the second largest in Dallas.
The other five stores Kroger is buying from Winn-Dixie are in southern Oklahoma.
Kroger, the nation's largest supermarket company, would pay an undisclosed amount of cash for the acquisition, which requires the approval of the Federal Trade Commission.
Both Kroger and Winn-Dixie declined to speculate on how long this approval process might take. Kroger also declined to comment on whether it expects the FTC to require the company to divest any stores to win the regulatory body's approval.
Along with the supermarkets, Kroger agreed to purchase a Fort Worth dairy from Winn-Dixie.
In addition, a member company of Tibbett & Britten Group North America, a Toronto-based logistics firm, would acquire the Winn-Dixie distribution center in Fort Worth. Another Tibbett & Britten member company currently provides warehouse management and transportation services to Kroger stores in northern Texas.
Winn-Dixie has for several months been the subject of published reports saying the company or parts of it were up for sale.
In August, A. Dano Davis, Winn-Dixie chairman and president, took the unusual step of denying these reports.
"Because of the many recent rumors to the contrary," he said, "I will break from our corporate policy and say that we are not negotiating for the sale of the company, nor have we been. Any rumors to the contrary are false."
When asked last week by SN, a company spokesman declined to comment on whether the company or any further part of it might be sold.
Last week Davis said, "The sale of our Fort Worth and Oklahoma operations will allow us to continue to focus on our core markets and redeploy capital and management attention to areas of our company that yield a greater return."
Kroger, which currently operates 169 supermarkets in Texas, said it plans to upgrade, remodel and reflag the stores under the Kroger name when the acquisition is complete.
Kroger also currently operates two supermarkets in Oklahoma.
A company spokesman said he was not aware that Wal-Mart was planning to bring its Neighborhood Market concept to Dallas-Fort Worth in the next year, but did not think the additional competition would alter Kroger's plans for the region.
"The Texas market has been a very competitive battleground for supermarket chains," he said. "I would expect that to continue."
