Key OK expected next week in Ahold deal for Giant Food Purchaser anticipates FTC staff approval of store divestments

Food

September 12, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Royal Ahold NV, the international food retailer buying Giant Food Inc., said yesterday that it expects Federal Trade Commission staff approval next week of agreements to divest 10 supermarkets, which would pave the way for the $2.7 billion acquisition.

To maintain competition, the FTC is requiring Ahold to sell 10 grocery stores in Maryland and Pennsylvania to rival grocery chains before buying Giant. In reviewing the sale, first announced in May, the FTC has focused on areas where Landover-based Giant competes with Martin's Food Markets, owned by Ahold's Giant Food Stores Inc. of Carlisle, Pa.

Ahold announced yesterday that it is making headway in discussions with FTC staff and is negotiating sales agreements with buyers for the 10 stores -- expected to include a combination of Giant and Martin's stores in Bel Air, Eldersburg, Westminster and Frederick.

By next week, the food conglomerate expects to have signed agreements, along with FTC staff approval of the buyers, said Hans Gobes, a spokesman for Netherlands-based Royal Ahold. The deals -- details of which Gobes would not disclose -- would still require approval of FTC commissioners, he said. As a result, Ahold once again extended its tender offer for Giant's Class A nonvoting stock, this time until Oct. 2.

"We're making good progress and feel assured that in the coming weeks we will get the green light and will finalize the acquisition," Gobes said. Also yesterday, in a move officials said was unrelated to the acquisition, Giant Food unveiled a new marketing strategy that emphasizes high-quality perishables and service and will include lower prices on about 4,000 basic items, an expanded assortment of bakery and deli goods and more efficient checkout lanes.

Customers will see more cross-merchandising among departments and will be offered samples of everything from lunch meat to rolls to sushi in a campaign that will begin Sunday with the tag line, "Fresh Ideas, Great Values."

Giant began shaping its new programs a couple of years ago as a way to increase sales and market share and forge a more focused identity, said Giant Chairman Pete L. Manos.

"We are the market leaders, but times are changing and new competition is coming," Manos said. Many of the initiatives have been put in place over the last few weeks, Manos said.

"Obviously, the competition in this market is getting tougher," said Kurt Funderburg, an analyst with Ferris, Baker, Watts in Baltimore. "Ten years ago, Giant was clearly different from everyone else in the market. But those lines have blurred over the last few years as people like Metro have entered the market and been innovative. And almost everyone has been aggressive with price."

Yesterday, employees at all Giant and Martin's stores were being informed of the FTC's progress, said Gobes, the Ahold spokesman. Managers had begun to notify employees at stores targeted for divestiture of their options: staying with the company, becoming employees of the buyer or taking a severance package, he said.

Managers and staff at Giant stores initially targeted for divestiture were told yesterday which stores would likely be sold, Giant officials said.

"We are doing internal communications to those stores that could be affected," said Mike Broomfield, Giant's chief operating officer.

Though Ahold and Giant officials did not release specific store sites, Buddy Mays, president of Local 27 of United Food and Commercial Workers, which represents Giant workers, said sources told him that the only Giant to be sold was the Eldersburg store, to Safeway Inc. The store is less than 2 years old.

"It's a victory on the consumers' part, the employees' part, for our members and the union," said Mays, whose local led a public campaign to keep the Giant stores open. "Four out of five is a victory for us."

Pub Date: 9/12/98

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