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Exhibit 99.2
[KROGER LOGO] FRED MEYER, INC.
PRESS RELEASE
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Media Contacts: Lynn Marmer, The Kroger Co. (513) 762-4449
Ken Thrasher, Fred Meyer, Inc. (503) 797-7008
Investor Contacts: Kathy Kelly, The Kroger Co. (513) 762-4969
David Jessick, Fred Meyer, Inc. (503) 797-7900
KROGER AND FRED MEYER MERGER APPROVED
CINCINNATI, OH and Portland, OR May 27, 1999 -- The Kroger Co. (NYSE:
KR) and Fred Meyer, Inc. (NYSE: FMY) announced today that the Federal Trade
Commission (FTC) has approved the merger of the two companies. The terms of the
approval require the sale of eight stores. The eight stores that will be
divested are located in Prescott, Sierra Vista and Yuma, Arizona; Cheyenne,
Green River and Rock Springs, Wyoming; and Price, Utah. ( A chart is attached.)
"We are pleased to receive regulatory approval of the merger," said
Joseph A. Pichler, Chairman and CEO of Kroger. "The FTC review process was
comprehensive and thorough."
Mr. Pichler expressed confidence that the merger will produce the
expected synergies on schedule. "Under the leadership of Bob Miller (Fred
Meyer's CEO) and Dave Dillon (Kroger's President), Kroger and Fred Meyer
executives have led integration teams since October 1998. The teams have
identified significant synergy
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opportunities, which we will begin to implement immediately," he stated. "The
Kroger Co. is confident that we will achieve our projected synergies ."
The Company expects to achieve $75 million in synergy savings in the
first 12 months, $150 million in the second 12 months and $225 million in third
12 months. Based on fiscal years, the Company projects the timing of the savings
to be as follows: 1999--$40 million; 2000--$115 million; 2001--$190 million; and
2002 and beyond--$225 million.
Robert G. Miller, who becomes Kroger's Vice-Chairman and Chief
Operating Officer when the merger closes, said "customers will see great stores
become even better. Our fundamental strategy is to leverage our size while, at
the same time, allowing our operators the freedom to respond to local
communities and markets. As we integrate the two companies, all of us are
focused on keeping the customer our number one priority. We feel confident we
will accomplish that goal because of the strong operators who lead our
divisions."
David B. Dillon, Kroger's President, believes a key to the merger's
success is that the identities and traditions of the various operating units
will not change. "Customers will continue to see the neighborhood chain they are
familiar with today. The combined company will have 18 food store divisions,
each with the authority to establish operating, merchandising and pricing
strategies in response to the demographic, economic and competitive conditions
in each market."
The companies expect to close the merger by the end of business today.
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The $13.5 billion merger creates the nation's largest grocery store
chain, with combined sales in fiscal year 1998 of $43 billion and EBITDA of $2.8
billion. Following the closing, Kroger will have 2,200 grocery stores in 31
states.
The merged company holds the #1 or #2 market share position in 33 of
the nation's 100 largest markets. In addition, Kroger will have a major presence
in 10 of the 15 fastest growing markets. The banners of the food stores are
Kroger, Ralphs Supermarkets, Smith's Food & Drug Stores, Fred Meyer, Quality
Food Centers (QFC), King Soopers, Dillon Stores, Fry's Food & Drug Stores, City
Market, Gerbes, Food 4 Less, Cala Foods, Bell Markets, PriceRite, FoodsCo,
Owen's Supermarkets and Hilander Food Stores.
In addition, the Company holds a leading position in two other retail
businesses. Fred Meyer is the fourth largest fine jewelry store operator, with
381 stores under five names in 26 states. As the fourth largest convenience
store operator, the Company has 797 stores under 6 banners in 15 states. Kroger
also is one of the nation's leading grocery and dairy manufacturer with 44
facilities in 17 states.
The combined Company has approximately 430 million shares outstanding
(on a diluted basis). Fred Meyer shareholders will receive one share of Kroger
common stock for each share of Fred Meyer common stock as a result of the
merger. The transaction is being treated as a "pooling of interests" for
accounting purposes.
In addition, the Company said that it plans to guarantee the public
debt of Fred Meyer and its subsidiaries.
The transaction is expected to be neutral to earnings per share in the
first 12 months and accretive thereafter. On a cash flow per share basis the
merger is
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anticipated to be immediately accretive. The Company has set an annual earnings
per share growth target of 16 -18% beginning in the year 2000. The Company
stated it is comfortable with analysts' consensus estimates for the first
quarter, which ended May 22, 1999, and for the 1999 fiscal year.
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This press release contains certain forward-looking statements about
the future performance of the Company. These statements are based on
management's assumptions and beliefs in light of the information currently
available to it. We assume 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, material adverse changes in the
business or financial condition of Kroger and other factors affecting the
businesses of the Company which are described in filings with the Securities and
Exchange Commission.
LOCATION STORE TO BE SOLD PURCHASER
Prescott, Arizona Fry's of Arizona Fleming Companies
Sierra Vista, Arizona Smith's Fleming Companies
Yuma, Arizona Fry's of Arizona Fleming Companies
Cheyenne, Wyoming Smith's (2) Nash Finch
Green River, Wyoming City Market Fleming Companies
Rock Springs, Wyoming City Market Fleming Companies
Price, Utah City Market Albertson's
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