Not Yet a Giant Step

October 05, 1994

Intercontinental acquisitions of major businesses are no longer unusual in this global marketplace. Control of huge corporations cross the oceans almost as quickly as their products. Thus, the large interest in Giant Food bought by a British food chain, J. Sainsbury, caused hardly a ripple in the investment world. To shoppers in the Baltimore and Washington areas, however, it's a major event.

For the moment, nothing will change in the grocery aisles. Sainsbury's $325 million investment in Giant buys it only a minority interest. Giant gets no new working capital from the deal, since the British company bought out the family of one of the two co-founders. Yet it isn't likely that Sainsbury is simply parking extra cash in a profitable business similar to its own, content to be a passive partner.

Control of Giant remains in the hands of Washington's Israel Cohen and family. But the octogenarian Mr. Cohen is the only family member in management. That could signal a sale when the stock passes to the next generation. Sainsbury, analysts agree, would be the likely buyer.

So the shopper pushing a cart through the region's dominant supermarket has reason to wonder what sort of proprietor J. Sainsbury would be. At first glance, not much different. Its British operations and its Shaw's supermarkets in New England are similar to Giant's. The Sun's Carl Schoettler felt as much at home in a Sainsbury store in London as he would at the Rotunda Giant.

Mr. Cohen is a perceptive businessman in a competitive, low-profit-margin, high turnover business. He has built a remarkably stable, skilled management team. Most foreign buyers of U.S. food retailers have had sense enough to leave day-to-day management to local executives. (Who would guess in walking into a quintessentially American 7-Eleven that it is Japanese-owned?) But others have seriously misjudged the U.S. market. A notable example was a French company's recent attempt to transfer its success with "hypermarts" to Glen Burnie, which failed after two years.

Those concerns are off in the future. For the present, there appears to be, if not a corporate betrothal, at least a chance for the suitor and the object of its desire to get to know each other.

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