PLEASANTON, Calif. -- Safeway here said last week it has signed a definitive agreement to acquire Anchorage, Alaska-based Carr Gottstein Foods for $110 million in cash.
tate's only full-line food warehouse and distribution center and the state's largest freight company.
Melissa C. Plaisance, senior vice president of finance for Safeway, said Safeway regards the Carr Gottstein merger as "a fill-in opportunity [and] an in-market acquisition.
"But we have previously said we intend to grow Safeway through acquisitions, and our ambitions go far beyond this."
Carr Gottstein's 1997 volume was $589.3 million. The acquisition would boost Safeway's volume from $22.5 billion (its volume at the end of 1997) to nearly $23.1 billion.
Although Plaisance declined to quantify the savings Safeway expects from the Carr Gottstein merger, she said the chain sees several areas to reduce costs, including administration, advertising, buying and distribution
"We also see opportunities to grow sales and profits by expanding private label, and we expect benefits from sharing best practices. That kind of collaborative effort really came through in our acquisition of Vons, where we've gotten many terrific ideas from them that we've been able to share with our stores, and they've gotten ideas from us, and we expect the same with Carr Gottstein."
Plaisance also said Safeway expects to refinance Carr Gottstein's debt of approximately $220 million to lower interest costs.
Larry Hayward, president and chief executive officer of Carr Gottstein, said his company has been restrained by its leverage, "and when we went through the process of looking at our strategic options, we were attracted by Safeway's financial strength, its private-label program and the synergies for distribution moving forward."
Hayward called the merger "an exciting day for our companies, associates and valued customers.
"After a long look at the best strategic options to ensure the long-term success of our business, we have agreed to merge with Safeway, which has an established track record of successfully integrating operations to create value for customers and shareholders.
"This is a terrific combination for our great state." Safeway said it will administer the Alaska stores after the merger, as it does with its current units, through its Seattle division. However, Richard Near, who has been Safeway's district manager in Alaska, has been named general manager of the Alaskan operation.
Commenting on the proposed merger, Steven A. Burd, president and chief executive officer of Safeway, said, "The merger of these two fine companies will allow us to better serve our Alaska customers. "
The transaction was unanimously approved last week by Carr's board of directors; Green Equity Investors, an affiliate of Leonard Green & Associates, Los Angeles, which owns approximately 35% of Carr's outstanding shares, has agreed to vote its shares in favor of the deal.
Completion of the merger is subject to approval of a majority of Carr Gottstein's shareholders, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and the receipt of applicable consents.
