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Albertsons to Buy British Grocery Unit

March 27, 2004|From Associated Press

Albertsons Inc., one of the nation's largest food and drug retailers, is getting a foothold in six New England states by buying the U.S. grocery business of British supermarket chain J. Sainsbury for more than $2.1 billion.

The deal announced Friday would give Albertsons 202 Shaw's and Star Market stores and would raise its total holdings to more than 2,500 stores in 37 states.

Albertsons President Larry Johnston said Shaw's 30,000 employees would retain their jobs in the purchase, which the companies hope to complete this spring.

Paul Gannon, Shaw's president and chief executive, said the stores would continue to operate under the Shaw's or Star banners.

Boise, Idaho-based Albertsons also is assuming about $368 million in leases as part of the deal. It plans to raise money for the purchase through a combination of sources including shares, debt and cash.

Sainsbury's U.S. subsidiary is based in West Bridgewater, Mass., and its stores are mostly in Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire and Maine.

Sainsbury said it would return about a third of the proceeds from the sale to its shareholders and use the rest to develop its core British retail business.

Albertsons currently operates 2,300 outlets in 31 U.S. states.

Albertsons said the acquisition should boost 2004 earnings, which had been projected at $1.30 to $1.40 a share.

It is trying to regain market share that was lost during the 141-day supermarket strike and lockout in Southern California that ended this month.

Albertsons shares were down 78 cents at $21.88 on the New York Stock Exchange.

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