Sainsbury expands New England chain British grocer buys 12 markets, 2 sites in $52 million deal

September 24, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

The British grocer that owns half of Giant Food Inc.'s voting stock yesterday said it increased the size of its New England grocery chain by acquiring 12 supermarkets and two store sites.

J. Sainsbury PLC said its Massachusetts-based subsidiary, Shaw's Supermarkets Inc., paid Royal Ahold NV, a Dutch retailer, $52 million in the deal.

The move will add 12 supermarkets and one store site to Shaw's five stores in Connecticut, the southernmost state of its holdings. The other new Shaw's site is in Rhode Island. At the same time, Landover-based Giant is expanding its reach, opening eight new stores in Delaware, Pennsylvania and New Jersey.

Analysts have said the growth of the two chains into each other's markets could lead to a merger of at least some operations. The distance between the two chains will shrink a bit more today when Shaw's announces the building of a store in New York -- its first outside New England.

Jane Reynolds, a Sainsbury spokeswoman, yesterday dismissed the idea of combining the two chains to form an East Coast powerhouse. She said Shaw's acquisition of stores reflects "the strategy of Sainsbury to increase its U.S. presence. Speculation about Giant is just that -- speculation."

Talk of a Sainsbury takeover of Giant heated up early last month, when the British company boosted its stake in Giant by buying 2 million nonvoting shares for $62 million.

The transaction increased Sainsbury's nonvoting stake from 16.7 percent to 19.9 percent. In the first acknowledgment of a possible takeover, that deal called for an additional payment from Sainsbury to the estate in the event of a takeover within four years.

At Giant's annual meeting this month, David J. Sainsbury, who appoints four of the nine Giant board members, promised that his company would leave American management in place if it ever took control of Giant.

He conceded that if he acquired Giant, he would keep the chain separate from Shaw's as long as their markets remained separate. If there were overlap, Sainsbury said, he would be inclined to merge them.

The stores involved in yesterday's deal were sold as part of Royal Ahold's $2.9 billion takeover of Stop & Shop, New England's largest supermarket chain. U.S. regulators required that the Dutch company sell 30 stores in order to complete the deal.

With the purchase, Shaw's will increase its number of stores to roughly 115 in Massachusetts, Connecticut, Maine, New Hampshire and Rhode Island. Giant has about 167 stores in Maryland, Virginia, Pennsylvania, Delaware and Washington.

Pub Date: 9/24/96

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.