American Stores
Sav-on Drugs Star Market |
American Stores Company was an American
History
By 1925, American Stores had grown from five supermarkets in 1917 to nearly 1,800 stores. In 1946, a proposed acquisition of Grand Union supermarkets was turned down by Grand Union stockholders.
1960s-1970s
In 1961, American Stores company acquired
American Stores itself was acquired in 1979 by the
American Stores was by far the larger organization, with 758 supermarkets, 139 drugstores, 53 restaurants, and 9 general merchandise stores in nine states when compared to the 241 Skaggs stores. Although the resulting entity bore the American Stores Company name, it was controlled by Skaggs management headed by Leonard S. Skaggs Jr. more familiarly known as
- In 1977, the Skaggs Companies, Inc. had amicably dissolved a partnership started in 1969 with the Albertsons supermarket chain which pioneered the first combination grocery/drug with stores named Skaggs Albertsons.
1980s
American Stores posted $83 million in earnings on sales of nearly $8 billion in 1983. But its presence was still weak in the midwest, New England, and Florida. To help overcome these remaining geographical shortcomings,
- In 1978, Skaggs Companies, Inc., originally had worked out an agreement to merge with Jewel Companies Inc., but the merger was torpedoed at the last minute when some of Skaggs's directors, concerned that they would lose their autonomy under the deal, failed to approve it.
Acquisition of the Jewel Companies
The
For two weeks, the Jewel Companies, Inc. management refused all comment on the offer, maintaining its silence even at a stormy shareholder's meeting before which Jewel shareholder groups controlling 20 percent of the company's stock had come out in favor of negotiating with American Stores. Finally, on June 14, Sam Skaggs and Jewel president Richard Cline reached an agreement after an all-night bargaining session. American Stores raised its bid for Jewel's preferred stock, increasing the total bid to $1.15 billion in cash and securities. In return, Jewel dropped plans for a defensive acquisition of Household International Inc. and accepted American Stores' offer. To help raise cash for the deal, American Stores sold its Rea and Derick, Inc. subsidiary comprising 134 drugstores in December 1984 to People's Drug, a division of Imasco Limited. 33 Alpha Beta grocery stores in Arizona sold to ABCO Foods, 22 Alpha Beta grocery stores and support facilities in northern California were also sold.
The acquisition of the Jewel Companies, Inc. consisted of the Illinois-based
This merger added 193 supermarkets, 358 drugstores, 140 combination food and drug stores, 301 convenience stores, and 132 discount stores to American Stores' holdings. But in 1985, the company found itself in legal trouble through its new subsidiary. A
In 1985, American Stores sold the White Hen chain, since convenience stores did not fit into the company's plans. Buttrey Food & Drug and Star Market were put up for sale in order to raise capital and pay down debt. Although the company continued to operate these subsidiaries, investment in remodeling and new construction for these stores and for Acme Markets was minimal throughout the 1980s.
By 1987, American Stores Company was the largest drug retailer in the United States, but only the third-largest grocery retailer and underperforming its peers. In October 1987, the company exited the Idaho and Washington drugstore markets with the sale of 25
Acquisition of Lucky Stores
In March 1988, American Stores made an unsolicited tender offer for
The acquisition included then
In August 1988, California Attorney General
However, on August 22, 1989, Associate Justice Sandra Day O'Connor, in her capacity as Circuit Justice for the Ninth Circuit, issued an interlocutory order staying the Ninth Circuit's issuance of its mandate back to the district court, which kept the preliminary injunction in place while the parties briefed the issues before the high court.[1] After oral argument on January 19, the U.S. Supreme Court issued a unanimous decision on April 30, 1990 (although Justice Anthony Kennedy filed a concurring opinion separately from Justice John Paul Stevens' opinion for the Court) in favor of the state of California.[2] The Court ruled that the words "injunctive relief" in Section 16 of the Clayton Act impliedly included the power to force divestiture of assets in order to ameliorate harm to the market from an anticompetitive merger.
Wishing to avoid additional lengthy litigation, the following month American Stores reached an agreement with Van de Kamp whereby the company was allowed to convert 14 Alpha Beta stores to the Lucky name but also had to sell 161 southern California stores (152 Alpha Beta stores and 9 Lucky stores) within 5 years. The deal put no restrictions on American Stores' future growth in California and did not require state approval of the buyer or terms of the sale.
In 1989, Kash n' Karry was acquired by its management from American Stores for $305 million (~$652 million in 2023).[3] American Stores also sold the minority interest in Eagle Food Centers that it had acquired from Lucky and sold it to New York-based Odyssey Partners.
Headquarters move to Southern California
Based on a recommendation by Booz-Allen, American Stores relocated its corporate headquarters from Salt Lake City to Irvine, California, in July 1988. At the time, the company indicated the reason for the move was to place the headquarters in one of the company's major operating market areas and therefore closer to its business interests. However, the corporate headquarters was moved back to Salt Lake City in 1989 with little explanation.
Sav-on Name Change
American Stores plans to build a coast-to-coast drugstore chain in the United States were underway. The strategy was to build a nationwide network of pharmacies, streamline operations and advertising in order to gain national recognition for the brand, especially for the high-margin private label products. The name
The name 'Osco' did not resonate well with Sav-on's southern California customer base. American Stores eventually made the decision to change the name of the former Sav-on stores back to
American Drug Stores, Inc.
In 1989, a new subsidiary American Drug Stores, Inc. was formed and consisted of American Stores drugstore holdings of
Jewel-Osco Florida
On March 16, 1989, the company opened a 75,000-square-foot Jewel-Osco combination store in
1990s
In the early 1990s, reducing the $3.4 billion in debt load became the prime challenge for the company; doing so was mainly accomplished through asset sales. By the end of fiscal 1992, long term debt was down from $3.4 billion to $2.1 billion.
Divestitures
In the early 1990s, American Stores divestitures included:
- October 1990: 44 Buttrey Food & Drug stores located in Montana, Wyoming, Washington, Idaho, and North Dakota by a management-led $184 million leveraged buyout.
- June 1991: 51 Osco Drug stores in Colorado, Utah, and Wyoming sold to Pay Less Drug Stores, at that time a division of Kmart, for $60 million.
- June 1991: 152 unit Alpha Beta chain sold to the Yucaipa Companies for $251 million.
- October 1991: 74 newly re-branded and remodeled Texas, Oklahoma, Florida, and Arkansas Jewel-Osco combination stores for $454 million to Jewel Food Storeschain in the midwest.
- The company also put its 275 unit ACME Markets chain on the block in early 1991, but shortly thereafter decided not to sell Acme Markets, apparently because the bids received were not deemed sufficient.
- November 1994, the Star Market grocery division, fifth in market share in the Greater Boston area, consisting of 33 food stores in Massachusetts and Rhode Island was sold to Investcorp Bank, an international investment bank for $288 million in cash and the assumption of substantially all of its outstanding liabilities. American Stores deemed Star Market expendable because the company wanted to focus on markets where it held first or second place in market share.
- January 1995, the company sold 45 Acme Markets located in New York and northern Pennsylvania to the Penn Traffic Company for $94 million.
Acquisitions
At the same time that the company was making major divestments in the early 1990s, American Stores also looked for opportunities to make strategic minor acquisitions, ones that would enhance its position in the main markets where it needed to strengthen market share.
- The company's were acquired.
- The following year the Osco Drugstores.
- February 1995, American Stores spent about $37 million for 17 Clark Drug stores in southern California, which were then converted to the Sav-on Drugsname.
Transformation into an Operating Company
American Stores had long been run as a decentralized holding company, but in order to compete in the fierce retail environment of the 1990s the company announced plans in 1992 to transform itself into an integrated operating company. As part of this transition, the company also began to centralize company-wide its procurement, warehousing, inventory control, distribution, marketing, payroll and human resources operations. Another aspect of the plan involved the consolidation of the central support organizations of the drugstore and grocery store operations. At the same time, American Stores sought to initiate faster growth, this time primarily through the opening of new stores and not through acquisitions. This ambitious plan to create better efficiencies won a lot of support from investors. The plan, called the Delta Project, was expected to turn American Stores into a more profitable national supermarket company with greater shareholder value by centralizing its buying operations, as well as putting together more food and drugstore combination stores.
From 1992 up through 1998, American Stores consolidated operations and moved major responsibilities of their subsidiaries to their headquarters in
Super Saver Food
In early 1994, American Stores launched a discount warehouse food store concept in California. New store formats were built in Anaheim, Indio, National City, Oceanside and several existing Lucky stores were converted to this warehouse format in Sacramento, Pittsburg, Vacaville, and Woodland. Initially, these stores were named Price Advantage, based on a Lucky Advantage prototype store in Escondido, California. Price Club sued American Stores over name infringement shortly before the grand opening of the stores. The stores were swiftly renamed Food Advantage the night before grand openings, with the word "Price" marked out with a thick ink marker on every label, tag and sign in the store. In the coming months these stores were branded as Food/Price Advantage and finally as Super Saver Food. Super Saver Food was a familiar brand which had been used in the 1970s and early 1980s by Acme for their discount grocery store format in Pennsylvania and was a trademark still owned by American Stores.
Kap's Kitchen and Pantry
In 1997, the company opened Kap's Kitchen and Pantry in
Skaggs Family Exit
In 1994, at the company's annual shareholder meeting, the company board elected Sam Skaggs’ son Don L. Skaggs a director effective October 1, 1994, to fill the position rendered vacant by the resignation of Aline W. Skaggs, wife of
Acquisition by Albertsons
At the company's June 17, 1998, annual meeting of shareholders in Salt Lake City, American Stores highlighted its accomplishments over the past year and its plans for the sustained long-term growth. In his keynote address, chairman and chief executive officer Victor L. Lund said, "During the past year, we have transformed many of our key plans for the future to reality. We are confident that our plan for growth is working and is squarely on track. We've set our sights very high because we know our visions of tomorrow will be achieved". A day earlier, American Stores had held a ceremony marking the opening of the American Stores Center, its 24 story corporate office building in downtown
Six weeks later, on August 3, 1998 it was announced that Albertsons would acquire American Stores for $11.7 billion (~$20.4 billion in 2023). Soon after the announcement, the Federal Trade Commission charged that Albertsons' proposed acquisition of American Stores would substantially lessen supermarket competition in California, Nevada, and New Mexico. The proposed acquisition, the FTC charged, could result in higher prices or reduced quality and selection for consumers. As a condition of the sale, Albertsons' and American Stores agreed to sell 144 supermarkets (104 Albertson's supermarkets, 40 American Stores' Lucky supermarkets) in 57 markets in order to resolve. The divestiture agreement, at the time, was the largest retail divestiture ever required by the Federal Trade Commission. Due to the mandated sale of stores, the acquisition took nearly a year to complete. In June 1999, the acquisition was complete, ASC was de-listed on the New York Stock Exchange and American Stores ceased to exist.
During 1999, the drugstore operations division and general merchandise procurement functions were moved from Salt Lake City to
For a very short time after the American Stores acquisition was completed, Albertsons was the largest food/drug chain in the
References
External links
- "American Stores Company History". FundingUniverse.
- U.S. Chain Store Timeline
- Cuff, Daniel F. (March 25, 1988). "American Stores Head A Reclusive Bidder". The New York Times.
- Business Network published: April 3, 1989 Jewel Osco dazzles Tampa with sparkling new format
- "American Stores' Merger Settlement". The New York Times. May 17, 1990.
- "American Stores is Selling 45 Acme Markets". The New York Times. October 1, 1994.
- Edgar Online published: April 26, 1995: SEC Filing, filed by AMERICAN STORES CO
- Edgar Online published: June 21, 1995 American Stores Notice of Annual Meeting of Shareholders
- Business Network published: July 8, 1996 American Stores awaits founder Skaggs' next move
- Steinhauer, Jennifer (August 28, 1996). "It's a Clashing of the Guard (Old vs. New) at American Stores". The New York Times.
- Chain Drug Review published March 17, 1997 Skaggs family to sell its stake in American Stores[dead link]
- Press Release Newswire: June 17, 1998 American Stores Company Highlights Accomplishments During the Past Year and Vision for the Future
- "FTC Complaint: In the Matter of ALBERTSON'S, INC., a corporation; and AMERICAN STORES COMPANY, a corporation". Cases and Proceedings. Federal Trade Commission. January 4, 2002.
- FTC Release: June 22, 1999 Agreement with Albertson's and American Stores Requires Selling of 144 Stores in Order to Preserve Supermarket Competition in California, Nevada and New Mexico