Exhibit 99.1
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JUNE 22, 1999
FOR IMMEDIATE RELEASE
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ALBERTSON'S, INC. AND AMERICAN STORES COMPANY
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REACH AGREEMENTS WITH FEDERAL TRADE COMMISSION AND STATE ATTORNEYS GENERAL
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IN CALIFORNIA, NEVADA AND NEW MEXICO
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MERGER EXPECTED TO BE COMPLETED WEDNESDAY
Albertson's, Inc. (NYSE:ABS) and American Stores Company (NYSE:ASC)
announced today that the companies have reached an agreement with the
Federal Trade Commission allowing the consummation of their pending merger.
In addition, the companies have entered into agreements with the Attorneys
General of California, Nevada and New Mexico. The agreements with the three
states include provisions substantially identical to those in the agreement
with the Federal Trade Commission. The companies expect to close the
transaction effective at 11:59 p.m. New York City time on Wednesday, June
23, 1999.
The agreements require Albertson's to divest a total of 117 stores in
California, 19 stores in Nevada and 9 stores in New Mexico. Of the stores
required to be divested, 40 are American Stores locations operated
primarily under the Lucky name, and 105 are Albertson's stores operated
primarily under the Albertson's name. In addition the companies will divest
four supermarket real estate sites as required by the agreements.
Albertson's has signed agreements to sell 31 stores to Certified
Grocers of California, Ltd.; 27 stores to Raley's Inc.; 40 stores and 2
store sites to Ralphs Grocery Company; 43 stores and 1 store site to Stater
Bros. Markets and 4 stores and 1 store site to The Vons Companies, Inc. All
but two of the stores are required to be divested over the next four
months. The aggregate gross annual sales for the fiscal year ended in
January 1999, of the stores required to be divested were $2.3 billion.
Gary Michael, chairman of the board and chief executive officer of
Albertson's, said, "We are extremely pleased to be moving forward with the
final steps required to complete the merger. The new combined company
creates many benefits for our customers, employees, suppliers, stockholders
and the communities in which we operate. This merger makes tremendous
financial and strategic sense for Albertson's.
"Strategically, this merger creates a nationwide retailer with retail
food and drug stores located throughout 38 states. It strengthens our
position in existing markets such as California and it gives us a strong
market presence in important urban markets such as Chicago and
Philadelphia. Additionally, the over 780 stand-alone drugstores provide a
new vehicle for growth that will help us take advantage of the promising
opportunities in the pharmacy business.
"Our growth story will extend beyond the merger with our continued
aggressive expansion program. The combined company plans to spend
approximately $11 billion over the next five years on capital expenditures
that are projected to add approximately 750 retail food and drug stores,
500 drugstores, and 600 fuel centers and to remodel approximately 730
stores.
"Financially, we believe that this merger will be accretive to
earnings per share in fiscal year 2000, excluding merger related costs.
While the number of divestitures was more than we had hoped for, it is
certainly manageable. Based on the results of the integration planning
process and the required store divestitures, we believe the synergies are
greater than the original estimate of $100 million in the first 12 months,
$200 million in the second full year and $300 million per year thereafter.
We expect to realize these substantial synergies through a combination of
cost reductions, enhanced purchasing ability and efficiencies from
increased volumes in our existing markets. The Company plans to streamline
operations by adopting common systems and `best practices' in all areas.
Any additional savings may be used to drive comparable store sales which
will help increase earnings in the future," said Mr. Michael.
The transaction is intended to be accounted for as a pooling of
interests, and Albertson's currently expects after-tax merger related costs
of approximately $700 million. A significant portion of these costs will be
recognized as a non-recurring restructuring charge in the second quarter of
fiscal 1999, with the remaining costs recognized as either period costs or
restructuring charges as incurred over the next two years. The cash portion
of these charges is estimated at approximately $300 million. When offset by
the cash received from the sale of the stores required to be divested and
the net proceeds from the sale of assets that will not be used in the
combined company, the net positive cash flow is approximately $300 million.
The Company anticipates that the net positive cash flow will be used to
reduce debt over the next two years.
"Our business is a people business -- from employees and customers to
suppliers -- and this merger will provide more opportunities for employees
and suppliers. This merger will allow us to meet the grocery, general
merchandise and pharmacy needs of more customers. We are pleased to welcome
the well-trained, motivated and loyal employees of American Stores. While
we are disappointed that the process of divesting stores will cause the
loss of valued employees, we are pleased that nearly all of their jobs will
be maintained by the retailers who are buying our stores," said Mr.
Michael.
Albertson's also announced that Dick King, president and chief
operating officer, has resigned his position with the Company and his
membership on the Board of Directors to pursue other opportunities. "We are
disappointed that Dick is leaving, however we have great bench strength
ready to step up," said Mr. Michael. The new Office of the Chairman will
include Mr. Michael; Michael Reuling, vice chairman; Carl Pennington,
executive vice president, marketing; and Thomas Saldin, executive vice
president and general counsel. In addition, Peter Lynch, general manager of
American Stores' Acme Markets will be promoted to executive vice president
of operations, and Robert Butler, vice president of Albertson's Southern
California Division, will be named senior vice president of merchandising.
Mr. Lynch and David Simonson, executive vice president of operations, will
each be responsible for half of the Company's eight operating regions,
while Mr. Butler will report to Carl Pennington.
Both Albertson's and American Stores are among the largest retail food
and drug operators in the United States. Albertson's, which is based in
Boise, Idaho, currently operates 997 retail stores in 25 Western,
Midwestern and Southern states. American Stores, based in Salt Lake City,
Utah, currently operates approximately 1,585 stores in 26 Western,
Midwestern and Eastern states. Following the merger and required
divestiture of stores, Albertson's will operate more than 2,400 stores in
38 states.
This press release contains certain forward-looking statements about the
ability of the Company and American Stores to satisfy the conditions to
closing of the merger transaction and with respect to the future
performance of the combined companies. These statements are based on
management's assumptions and beliefs in light of the information currently
available to it. The Company assumes no obligation to update the
information contained herein. These forward-looking statements are subject
to uncertainties and other factors that could cause actual results to
differ materially from such statements including, but not limited to, the
ability of the Company and American Stores to close the merger transaction;
material adverse changes in the business or financial condition of either
company prior to closing of the merger transaction; the Company's ability
to successfully integrate the operations of American Stores, and other
factors affecting the respective businesses of the Company and American
Stores which are described in the Joint Proxy Statement and Prospectus and
their respective Forms 10-Q filed with the Securities and Exchange
Commission.
* * * * * * * * * *
CONTACT:
ALBERTSON'S, INC. AMERICAN STORES COMPANY
BOISE, IDAHO SALT LAKE CITY, UTAH
INVESTOR RELATIONS INVESTOR RELATIONS 801/961-4525
A. CRAIG OLSON 208/395-6284
RENEE BERGQUIST 208/395-6622
NEWS MEDIA 208/395-6392
MIKE READ
JENNY ENOCHSON
Team
Albertson's
June 22, 1999
[Albertson's logo appears]
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Albertson's Inc.
Executive and Senior Operations Officers
[Chart showing the Management Structure of Albertson's]
Chairman & Chief Executive Officer*
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Michael
EVP & General EVP EVP Vice
Counsel* Marketing* Distribution EVP Operations EVP Operations Chairman*
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Saldin Pennington Brother Lynch Simonson Reuling
President
SVP Southern President EVP &
Merchandising Region Midwest Region CFO
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Butler Emmons Josefowicz Olson
President
Drugstore President EVP
Region So. Cal Region IS&T
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Tripp Cefalo Steele
EVP
President President Human
Eastern Region No. Cal Region Resources
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Herkert Keprta Young
President President
Northwest Intermountain
Region Region
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Lucas Denningham
*Member, Office of the Chairman
Albertson's, Inc.
Strategic Rationale
- Strengthens Albertson's Position In Existing Markets
- Enables Albertson's To Enter Important New Urban
Markets
- Enables Albertson's To Enter Stand-Alone Drugstore
Business
- Creates Tremendous Opportunities For Fast-Growing
Pharmacy Business
- Accelerates Albertson's Earnings Growth
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Albertson's Inc.
Synergies
(In Millions)
Year 1 Year 2 Year 3
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General Office Consolidation $ 40 $ 80 $ 100 |
Eliminate Systems Redundancy 10 25 70 |
In-Market Synergies 20 25 30 | 200
Cost of Goods Improvement 20 50 70 |
Distribution Opportunities 10 20 30 | 100
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Grand Total $100 $200 $300
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Albertson's, Inc.
Estimated Merger Related
Costs/Cash Flow
(In Millions)
Earnings Cash
Impact Flow
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Merger Related Costs $ 1,000
Tax Benefits 300
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Merger Related Costs After Tax $ 700 $ (300)
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Sale of Assets 600
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Net Positive Cash Flow $ 300
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Albertson's, Inc.
Company Banners
[Chart indicating the various Albertson's Banners]
Albertson's, Inc.
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BUSINESS: Retail supermarkets and
combination stores and
stand-alone drugstores
OPERATES: Over 2,400 stores in 38 states
1998 REVENUES: Almost $34 billion
EMPLOYEES: Approximately 200,000 employees
CORPORATE OFFICE: Boise, Idaho
Albertson's Food & Drug Max Foods Seessel's Lucky Stores
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BUSINESS: BUSINESS: BUSINESS: BUSINESS:
Supermarkets/Combo Warehouse Food Stores Supermarkets/Combo Supermarkets/Combo
Stores Stores Stores
PRIMARY MARKETS: PRIMARY MARKETS: PRIMARY MARKETS: PRIMARY MARKETS:
Operates in 25 states California, Denver, Memphis, Tennessee Philadelphia
Dallas/Ft. Worth
Jewel Osco Drug Sav-on Acme Markets
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BUSINESS: BUSINESS: BUSINESS: BUSINESS:
Supermarkets/Combo Drug Stores Drug Stores Supermarkets/Combo
Stores Stores
PRIMARY MARKETS: PRIMARY MARKETS: PRIMARY MARKETS: PRIMARY MARKETS:
Chicago Chicago, Kansas City, Southern California, Philadelphia
Phoenix, New England Las Vegas
and other areas
Albertson's, Inc.
Retail Stores
Store Location Map as of May 1, 1999, Excluding Divested Stores
[Image of Map of United States indicating the number
of (1) Supermarkets & Combo Stores, and
(2) Stand-Alone Drugstores in each State]
Supermarkets &
State Combo Stores Stand-Alone Drugstores
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Alabama 0 0
Alaska 0 0
Arizona 41 75
Arkansas 2 1
California 471 283
Colorado 50 0
Connecticut 0 0
Delaware 15 0
District of Columbia 0 0
Florida 105 0
Georgia 1 0
Hawaii 0 0
Idaho 34 1
Illinois 172 88
Indiana 6 54
Iowa 5 30
Kansas 6 27
Kentucky 0 0
Louisiana 24 0
Maine 0 1
Maryland 12 0
Massachusetts 0 57
Michigan 0 2
Minnesota 0 1
Mississippi 6 0
Missouri 10 36
Montana 34 10
Nebraska 10 14
Nevada 37 36
New Hampshire 0 20
New Jersey 71 0
New Mexico 24 4
New York 0 0
North Carolina 0 0
North Dakota 2 6
Ohio 0 0
Oklahoma 26 0
Oregon 51 0
Pennsylvania 68 0
Rhode Island 0 0
South Carolina 0 0
South Dakota 1 3
Tennessee 21 0
Texas 200 0
Utah 44 0
Vermont 0 1
Virginia 0 0
Washington 77 0
West Virginia 0 0
Wisconsin 8 33
Wyoming 12 0
TOTAL 1646 783 = 2429
Albertson's, Inc.
Distribution Operations
[Image of Map of United States indicating the
Distribution Centers for (1) Food, (2) General
Merchandise, and (3) Food and General Merchandise]
Food and
State Food General Merchandise General Merchandise
----- ---- ------------------- -------------------
Alabama 0 0 0
Alaska 0 0 0
Arizona 1 0 0
Arkansas 0 0 0
California 6 1 0
Colorado 1 0 0
Connecticut 0 0 0
Delaware 0 0 0
District of Columbia 0 0 0
Florida 1 0 0
Georgia 0 0 0
Hawaii 0 0 0
Idaho 0 1 0
Illinois 1 1 0
Indiana 0 0 0
Iowa 0 0 0
Kansas 0 0 0
Kentucky 0 0 0
Louisiana 0 0 0
Maine 0 0 0
Maryland 0 0 0
Massachusetts 0 0 0
Michigan 0 0 0
Minnesota 0 0 0
Mississippi 0 0 0
Missouri 0 0 0
Montana 0 0 0
Nebraska 0 0 0
Nevada 0 0 0
New Hampshire 0 0 0
New Jersey 0 0 0
New Mexico 0 0 0
New York 0 0 0
North Carolina 0 0 0
North Dakota 0 0 0
Ohio 0 0 0
Oklahoma 1* 1 0
Oregon 1 0 0
Pennsylvania 2 1 1*
Rhode Island 0 0 0
South Carolina 0 0 0
South Dakota 0 0 0
Tennessee 0 0 0
Texas 2 0 0
Utah 1 0 0
Vermont 0 0 0
Virginia 0 0 0
Washington 0 0 0
West Virginia 0 0 0
Wisconsin 0 0 0
Wyoming 0 0 0
* Under Construction