BOISE, Ida. -- Albertson's Inc. said Tuesday it has agreed to buy 74 Jewel-Osco combination food and drug stores from American Stores Co. for an undisclosed price.
Albertson's said the deal includes stores in Texas, Oklahoma, Florida and Arkansas, and a general merchandise warehouse in Ponca City, Okla.
It said the purchase will allow it to lower its overall cost structure.
Albertson's, of Boise, Ida., operates 559 stores in 17 western and southern states. It expects the deal to close in early April.
American Stores said that for its current fiscal year, which ends on Feb. 1, the 74 stores will have annual sales of about $1.5 billion and will not be profitable.
J.L. Scott, president and chief executive officer of American Stores, said, 'As we evaluated our market position, the competitive and economic environment as well as the lack of adequate distribution facilities to remain competitive in these areas, we decided it was in our shareholders' best interest to sell the stores and deploy our resources in more profitable markets.'
American Stores said the sale price will approximate the book value of the properties. It also said it expects the proceeds, after current liabilities and taxes, to exceed $300 million, which will be used to reduce long-term debt.
American Stores noted that in 1989 it sold off 21 combination food and drug stores in Arkansas, Kansas, Utah and Austin, Texas.
Scott said the proposed sale of the 74 stores is consistent with the company's strategy of divesting stores that are underperforming, while concentrating on markets with good performance and strong market shares.
American Stores operates 1,021 grocery and combination stores, including Acme Markets, Jewel Food Stores, Star Market and Lucky Stores Inc. Its American Drug Stores operates 703 Osco Drug and Sav-on stores.
