Transformational deal for Haggen

Date : 19 December 2014

With Albertsons and Safeway announcing that they have entered into agreements to sell 168 stores to secure clearance for their proposed merger, northwest based Haggen has emerged as one of the key beneficiaries, acquiring 146 of the stores.

Local operator makes leap to regional grocer

Until this announcement, Haggen would have been relatively unknown within the US grocery industry beyond its northwest heartland.  Based in Bellingham, Washington state, the retailer currently operates 18 stores in Washington and Oregon, and has been scaling back its operations, divesting its discount-focused stores, Top Foods, while investing in its Haggen Northwest Fresh concept. Having previously been owned and operated by the Haggen family, the business was acquired by private equity in 2011. These acquisitions could see Haggen's annual revenue grow to around $3bn, making it one of the Top 50 grocery retailers in North America.

Expanding its presence into three new states

This deal significantly increases Haggen’s presence in the northwest. It will acquire stores for the first time in Arizona, California and Nevada, while also adding to its existing portfolio in Oregon and Washington. From Safeway, it will acquire 15 Safeway branded stores and 32 Vons branded stores, mainly based in California, and 99 Albertsons branded stores, the majority of which are also based in California. Most required divestments were expected to come from this state given the geographic overlap between Safeway and Albertsons.

Supported by Supervalu as the company scales up

This will be a significant undertaking for Haggen and will be supported by Supervalu. It will serve as one of Haggen’s primary grocery suppliers and transition services provider. In this role, Supervalu will supply products and provide wholesale services to 64 Haggen stores in Oregon and Washington. In 2015, Haggen plans to convert these acquired stores to the Haggen Northwest Fresh brand. Additionally, Supervalu will provide transition services for all 164 Haggen stores, including IT support and certain back-office support functions.

Divestments aim to secure FTC approval for merger

The other divestments announced include the purchase of eight stores by Associated Food Stores in Montana and Wyoming, 12 stores purchased by Associated Wholesale Grocers in Texas and two stores purchased by Supervalu in Washington. These divestments should help secure Federal Trade Commission (FTC) clearance for the Safeway and Albertsons merger which was announced in March. This is expected to close in January 2015.

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