Albertson’s, Lucky may have to sell some LV stores due to merger

Tuesday, Aug. 4, 1998 | 11:28 a.m.

Las Vegas is one of the largest markets in which both Albertson's and Lucky operate grocery stores.

That could create some thorny dilemmas for Boise, Idaho-based Albertson's, which announced Monday it is acquiring American Stores Co. of Salt Lake City, owner of the Lucky and Sav-on drug store chains, for $8.3 billion.

An Albertson's official said the company hasn't determined what it plans to do with the 25 Lucky stores in Southern Nevada -- or if the Federal Trade Commission will concur with whatever Albertson's decides.

The acquisition, coupled with the merger mania occurring in the banking industry, is also likely to spell confusion to customers who could see their current bank branch change at their neighborhood supermarket.

This scenario is already playing out: Some Las Vegas grocery-store chains will have different bank affiliations from store to store.

Mike Read, vice president of public affairs for Albertson's, said his company plans to retain both companies' current store names, but some individual store names could change.

That's where things become unclear. In markets where there is significant overlap of Lucky and Albertson's stores, such as Las Vegas, the company hasn't determined whether it would attempt to operate all the stores under their current names, convert them to the Albertson's brand or come up with some other alternative. Albertson's has 18 local stores.

Regardless of what they decide, the FTC could intervene.

"We may have to divest some of our stores in Las Vegas," Read said. "I can't tell you when that would be or how many would be involved."

Read said the FTC would look at competitive issues in the Las Vegas market when making a determination about divesting property.

An FTC spokeswoman said her agency could offer no comments on mergers or acquisitions in progress.

She said the agency determines whether an acquisition would cause prices to increase or service to decline. She did not disclose how such an investigation is conducted or if investigators would look specifically at the Las Vegas marketplace.

Other Albertson's-Lucky market overlaps occur in California and New Mexico.

"They will have to sell some stores, but I don't think that will prevent this from working," analyst Debra Levin of Morgan Stanley Dean Witter told the New York Times.

Albertson's officials have said the number of job losses resulting from the acquisition would be minimal and most likely would occur at the management level at American Stores Co.

Two other issues that remain in limbo are the status of discount shopping cards and in-store banking services.

Read said those matters still haven't been resolved and are expected to be discussed in detail in the next six months, the time frame in which Albertson's hopes to complete the acquisition.

Albertson's is the only major grocery store chain serving Las Vegas that does not operate some form of discount shopping card. Lucky, meanwhile, offers customers its Rewards Card, usable at Lucky and Sav-on Drugs, another American Stores Co. outlet.

Also under review -- and by far more complicated -- is in-store banking.

San Francisco-based Wells Fargo Bank operates in-store branches in all 24 Clark County Lucky stores. Bryan Waters, senior vice president of Wells Fargo, Nevada, said his bank has received no word of any changes contemplated at those stores and he said he expects Wells would continue to work with the Albertson's management team.

Minneapolis-based U.S. Bank has a contract to provide in-store branches at Albertson's as part of a four-state pact.

Marcia Kakiuchi, senior vice president and manager of in-store banking-West for U.S. Bank, said her company is in the middle of a growth period and expects to locate another eight branches in Albertson's Nevada stores between now and mid-2000.

"Albertson's has been so busy with the details of this acquisition that their arrangement with us is secondary at this point," Kakiuchi said. "It's really too early to tell if there would be any significant impact on us."

The only Lucky store in Southern Nevada that doesn't have Wells Fargo presence is the new Pahrump market, which is served by Wells rival Bank of America, which also operates in California's Lucky stores.

Bank of America had been the domain of Vons supermarkets up until last year when Pleasanton, Calif.-based Safeway acquired Vons.

With Wells Fargo Chairman Paul Hazen on Safeway's board of directors, Vons began a new relationship with Wells Fargo and now has three branches in new Vons stores.

But now that relationship could change with Hazen nearing retirement and the merger of Wells Fargo and Minneapolis-based Norwest Banks progressing. Las Vegas is among the markets where Wells Fargo and Norwest will divest properties, deposits and loans to conform with federal antitrust laws.