ACQUISITIVE MINDS 1998-02-23 (2)

NEW YORK -- Some of the country's largest supermarket chains and wholesalers are continuing to look out for acquisitions that would drive sales volume and create cost-saving synergies, according to executives who spoke here this month at the Donaldson, Lufkin & Jenrette Food and Drug Retailing Conference.

he best explanation came from Mike Julian, chief executive officer of Jitney-Jungle Stores of America, Jackson, Miss., which is wrapping up an acquisition of the Mobile, Ala.-based Delchamps chain.

"This is a business of consolidate or be consolidated," Julian said.

Ed Comeau, vice president at DLJ, said 1998 looks to be another year of heightened merger and acquisition activity due to several conditions, including:

A slow-growth/low-inflation environment that points toward acquisition as the fastest way to jump-start flat sales.

A diverse base of supermarket owners, including investor groups, food wholesalers and families, all of whom have a variety of reasons for selling their stores.

A shift in attitude favoring buying stores over building new ones.

Streamlined infrastructures that make merging easier. Aggressive strategic buyers, who offer a good price and a chance to continuously build shareholder value.

"By consolidating, retailers are shifting the balance of power, from the supplier to the retailer," Comeau said. "This is good for the customer and good for the retailer."

Following are highlights from some of the DLJ presentations, as reported by SN Editors David Orgel, Greg Gattuso and Chapin Clark.