ASSOCIATED FOOD STORES TO BUY TWO CUSTOMERS

DAVID ORGEL

SALT LAKE CITY -- Associated Food Stores here is purchasing two of its retail group customers in a move that would bring the 59-year-old wholesaler into the corporate store business for the first time in its history.

Associated, a retailer-owned cooperative that supplies independents in eight Western states, is to purchase the supermarkets owned and operated by Macey's here, and Lin's MarketPlace, St. George, Utah. The deal includes eight units of Macey's and four of Lin's.

The proposed acquisition is in response to a more aggressive stance by chain competitors, which have recently purchased a number of stores that were customers of Associated, Marc Purles, director of marketing communications, told SN.

Both Macey's and Lin's were considering selling their businesses to other companies, "and we didn't want it to happen," Purles said.

Richard A. Parkinson, Associated's president and chief executive officer, said, "This is a bold, proactive step for us. We deemed it necessary to preserve the integrity and future of the retailer-owned system."

Parkinson said that the wholesaler wouldn't rule out future purchases, although there aren't any under consideration at this point.

Purles said Associated will consider such deals "when it makes sense for proactive or reactive reasons. The environment we're seeing today -- with mergers and consolidation -- makes it extremely important to have a strategy in place to protect market share."

The local management teams at both Macey's and Lin's are expected to continue to lead day-to-day operations, although there would be new top executives at each organization, Purles said. Both store banners would continue to operate. Macey's is known as a hybrid warehouse type of retailer while Lin's has a reputation as a high-service company, Purles said.

Associated would create a wholly owned subsidiary of which Macey's and Lin's would become a part. The deal is expected to be completed before the end of February 1999 pending approval by the Federal Trade Commission. The purchase price was not disclosed. The two retailers represented $112 million in wholesaler purchases from Associated, Purles said.

In addition to Salt Lake City and Payson, Utah, Associated operates distribution centers in Boise, Idaho, and Billings and Helena, Mont.