No. 1 Kroger makes its move, sets merger with Fred Meyer

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Kroger Co., Cincinnati, confirming press reports this morning, said it agreed to buy Portland, Ore.-based Fred Meyer Inc. in a deal that will create a 2,200-store supermarket behemoth with annual revenues of $43 billion and stores in 31 states.

Already the nation's largest supermarket chain, Kroger said the deal--estimated to cost $8 billion plus assumption of $4.8 billion in Fred Meyer debt--creates a food retailer with the largest geographic reach in the U.S. market.

"This is a powerful strategic combination," said Kroger Chairman-CEO Joseph Pichler. "Together, we will have the No. 1 or No. 2 share in 33 of the nation's largest markets. Fred Meyer's strength in fast-growing western markets [where it battles Safeway] will complement Kroger's leading position in the Midwest and Southwest." Kroger operates 1,398 supermarkets and 802 convenience stores with sales of $28 billion. Fred Meyer has $15 billion in sales and 800 stores in 12 western states. Fred Meyer acquired Ralph's Grocery Co. and Quality Food Centers, two other supermarket operators important in the West, this year.

Mr. Pichler will be chairman-CEO of the combined company. Fred Meyer Chairman Ron Burkle becomes chairman of the executive committee at Kroger.

"Kroger and Fred Meyer represent the ultimate strategic combination. It will create a truly national company," Mr. Burkle said.

In measured media spending tracked by Competitive Media Reports, Kroger spent $62 million last year and Fred Meyer (prior to its acquisitions this year) spent $18.9 million.

Copyright October 1998, Crain Communications Inc.

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