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May 31, 2000
Salisbury Post; Rowan County, NC

Local News

Hannaford to sell 38 stores if Delhaize deal goes through

BY SARA PITZER
SALISBURY POST

           
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 FTC’s approving Delhaize America’s 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 doesn’t 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 doesn’t 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 we’re 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.”

 

   

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