Delhaize America, the parent company of Food Lion, has submitted a divestiture plan to the
Federal Trade Commission to sell 38 Hannaford stores in Virginia and North Carolina, the
company announced this morning.Submitting the
proposal is a required step for Delhaize America to get regulatory approval for acquiring
the Hannaford grocery chain. In ongoing talks during a routine review of the proposed
merger with Hannaford, the FTC staff considered anti trust issues. Delhaize chose selling
the Hannaford stores in the Southeast as a way to address antitrust concerns.
If the planned merger goes through, Hannaford will become
the third banner owned by Delhaize America, along with Food Lion and Kash n Karry,
which is based in Tampa, Fla.
In the proposed divestiture plan, Hannaford will sell Lowes
Foods 12 Hannaford stores in the Raleigh and Wilmington, N.C. areas. They will operate
under the Lowes Foods FreshSmart name.
Hannaford will also sell 20 Virginia stores to an affiliate
of Cincinnati-based Kroger Co. Another five North Carolina Hannaford stores will be sold
to the Sylvester/Floyd Group, based in Richlands, N.C., which operates 26
Piggy-Wiggly-affiliated supermarkets.
The divestiture sales depend on the FTCs approving
Delhaize Americas pending $3.6 billion merger with Hannaford and are part of the
merger plan.
Laura Kendall, chief financial officer of Delhaize America
and Food Lion, said if the FTC approves the divestiture plan, Delhaize America and
Hannaford anticipate a closing date on the Hannaford merger before Aug. 1.
Selling the 38 Hannaford stores will not affect the $3.6
billion Delhaize pays to acquire the Hannaford chain., Food Lion spokeswoman Tawn Earnest
said. We would have preferred to keep all the Hannaford stores open, she said,
but to meet FTC requirements, we have to have a divestiture plan.
Kendall said this plan, in the long run, will help direct
resources to areas where Hannaford is thriving in mainly the Northeast.
As far as the merger goes, It doesnt change a
thing, she said. We think it is very positive news.She said the 38
stores Hannaford will sell before the merger are stores that historically have had low
sales and lost money. This helps us get out from under their losses, she said,
while establishing a presence in the Northeast which is a new market for Delhaize America.
The company doesnt anticipate any FTC problems in
completing the merger, Kendall said, because the process has been in constant
discussion. They (FTC staff)have previewed this plan. They were well aware we had these
buyers and were negotiating the purchase agreements.The FTC also has to approve the
buyers.
This morning, Lowes Foods released a statement about its
agreement to purchase 12 Hannaford stores and a store site, saying the purchase
enables Lowes Foods to enter these markets with a significant initial
presence.
Reaction on Wall Street has been very positive this
morning,Kendall said. Everyone is sighing a big sigh of relief were well
on way to having a plan that appears to be acceptable. We are bullish. We think it is
great we have made it to this step.