MERGING TRAFFIC

ELLIOT ZWIEBACH

Consolidation happens.

And the industry continued to find that out in 1995. One of the busiest consolidators in 1995 was Yucaipa Cos., the Los Angeles-based investment firm that acquired Dominick's Finer Foods, Northlake, Ill., in March at a cost of $749 million plus debt and merged Food 4 Less Supermarkets, La Habra, Calif., into Ralphs Grocery Co., Compton, Calif., in June at a cost of $1.5 billion. Coming on the heels of its 1994 acquisition of Smitty's Super Valu, Phoenix, and its established position with warehouse stores in northern California and the Midwest, Yucaipa emerged from 1995 as a major industry player, with 400 stores doing a volume of just under $9 billion and the potential to leverage its buying clout on a multiregional basis. "Yucaipa's holdings control 30% of the southern California market, 24% of the Chicago market and 15% of the Phoenix market," Ron Burkle, Yucaipa's majority owner and managing partner, told SN, "and we believe leveraging the buying power of those three companies can probably get us national buying agreements." Also scoring a double whammy last year was Stop & Shop Cos., Quincy, Mass., which knocked out a major New England competitor with its acquisition in October of Purity Supreme, North Billerica, Mass., for $255 million, including assumption of $208 million in debt, then gained entry into the Long Island market -- and a toehold in the lucrative New York metro market -- with the acquisition of Melmarkets/ Foodtown, Garden City, N.Y., for $87 million. On the wholesale side of the business, Richfood Holdings, Mechanicsville, Va., also had a double-banner year, acquiring Super Rite Corp., Harrisburg, Pa., in October for $320 million, which doubled Richfood's sales base and extended its reach throughout the Mid-Atlantic region from South Carolina to New York, and acquiring the wholesale business of Camellia Food Stores, Norfolk, Va., in April for $10 million, which strengthened Richfood's position in its core distribution area. John E. Stokely, Richfood president and chief operating officer, said acquisitions such as Super Rite, Camellia and Rotelle (a frozen food supplier) in 1994 "have been right in our region [where] there are not as many control issues or growing pains. "Even though we've gotten bigger, we've done it in a relatively tight geographic area. And that's not by accident, it's by design." Donald D. Bennett, chairman, said he doesn't expect Richfood to move beyond the Mid-Atlantic region but to stay within a 350-mile radius of its headquarters near Richmond, Va. Mayfair Super Markets, Elizabeth, N.J., was acquired by Ahold, the Netherlands-based retailer, in July at a cost of $188 million, which strengthened Ahold's position in the Northeast corridor. Those stores are scheduled to become part of Ahold's Edwards Super Food Stores division late in 1996. As a result of the Mayfair sale, Twin County Grocers, Edison, N.J., which had been supplying those stores, sought to replace the $350 million in wholesale sales to Mayfair. At the end of the year it was holding merger talks with Key Food Stores, Brooklyn, N.Y., whose wholesale volume is about $550 million. Smith's Food & Drug Centers, Salt Lake City, was also in discussions as the end of the year approached as it sought buyers for its 34 southern California stores. In other consolidation moves:

Bruno's, Birmingham, Ala., became a private company when it was acquired by Kohlberg Kravis Roberts & Co., New York, for $1.15 billion in July.

Hannaford Bros., Scarborough, Maine, accelerated its Southeast expansion with the acquisition in July of eight Farm Fresh units in Richmond, Va., for $25 million, plus the value of inventory and lease assumptions, to add to the 23 Wilson's Supermarkets it acquired in 1994.

Loblaw Cos., the Toronto-based wholesaler, surrendered its U.S. retail operations in June when it sold 85 National Tea stores to Schnuck Markets, St. Louis, for $215 million. Schnuck retained 57 Midwest stores (under government orders to divest 24 stores) and sold 28 Southeast stores to Schwegmann Giant Super Markets, New Orleans.

Homeland Stores, Oklahoma City, sold 29 units and a distribution facility to Associated Wholesale Grocers, Kansas City, Kan., in May for $45 million, plus the value of the inventory.

Winn-Dixie Stores, Jacksonville, Fla., established its northernmost foothold when it acquired Thriftway, Cincinnati, in March in a deal valued at about $175 million.

Quality Food Centers, Bellevue, Wash., acquired Olsen's Food Stores, Lynnwood, Wash., in February for $38 million plus assumption of $20 million in debt. The deal included 12 stores, four others under construction and several future sites.

Harvest Foods, Little Rock, Ark., opted to get into food distribution in a big way when it acquired Rand's, also based in Little Rock, in January for an undisclosed sum. The retailer said it would use Rand's as a springboard to move into wholesaling.