Conspiracy? Albertsons Buys Back Grocery Stores At A Bargain | KUOW News and Information

Conspiracy? Albertsons Buys Back Grocery Stores At A Bargain

Mar 29, 2016
Originally published on March 30, 2016 2:27 pm

A U.S. bankruptcy judge Tuesday approved the sale of the profitable core of the Haggen grocery chain to rival Albertsons. That brings to a close the dismantling of the Washington-based company.

Haggen mushroomed in size early last year when it bought 146 stores from Safeway and Albertsons across the West. The Federal Trade Commission had forced Safeway and Albertsons to unload stores to preserve competition following their merger.

After a tumultuous year of indigestion though, instead of offering competition, Haggen now belongs to Albertsons.

"You would think somebody would be smart enough to understand what was going on, particularly in the FTC and the federal government,” said David Livingston, a grocery industry analyst at Milwaukee-based DJL Research.

Livingston said Albertsons has “shrewdly” reacquired the best stores it was forced to divest a short time ago, sometimes even at a steep discount.

"It almost looks like a conspiracy,” Livingston said. “I think we're going to have a lot of conspiracy theorists come out on this."

Haggen and Albertsons declined comment.

'It is best for consumers'

A spokeswoman for the FTC said it did not object to Albertsons' purchase of Haggen's remaining assets because the alternative might have been empty storefronts.

"While the divestitures did not lead to the full result we were looking for – a new supermarket competitor in each market area – most of the divested stores do remain supermarkets. The FTC believes that it is best for consumers if these stores continue to operate as supermarkets, even if Albertson’s owns them," spokeswoman Betsy Lordan wrote in an email.

At the conclusion of a hearing Tuesday in U.S. Bankruptcy Court in Delaware, Judge Kevin Gross approved the sale of 29 Haggen stores in Oregon and Washington to Albertsons. The judge separately approved a liquidation sale for three remaining Haggen stores that attracted no bids during the bankruptcy auction process.

According to a court filing, Boise-based Albertsons made the only acceptable offer for Haggen's core stores. The winning bid was $106 million with provisions for various adjustments.

A happy union

The United Food and Commercial Workers Union released a statement Tuesday expressing pleasure that Albertsons would assume the labor agreements covering workers at the affected stores.

"This means that every UFCW member who works within these 29 Haggen stores will keep their job, seniority status, wages, earned sick leave, vacation days, paid time off and personal holidays," the statement read. "For several months now, the Haggen bankruptcy process has brought a great deal of uncertainty to hard-working UFCW members and their families. With the sale of these 29 stores to Albertsons, we are optimistic that everyone who works within them will finally be able to have the certainty and stability that they deserve."

In a press release, Albertsons said it will keep 15 of the original Haggen stores operating under that brand after it takes control and will keep a corporate office in Bellingham. The other newly acquired stores will revert to the Albertsons brand.

The Haggen chain was founded in Bellingham in 1933. Before its big acquisition of divested Safeway and Albertsons stores, Haggen operated 18 supermarkets.

At a prior bankruptcy auction in November involving 95 stores, Albertsons reacquired 30 other locations it and Safeway sold to Haggen. Albertsons bought them back for a fraction of what Haggen paid less than a year before.

A wash for consumers?

Some of those shuttered supermarkets have yet to reopen under their original brands leaving some shoppers in communities such as Ashland and Baker City, Oregon, grumbling about being victims of a grocery monopoly or duopoly.

Livingston thinks the outcome will be a wash for most consumers.

"You're in an area where you've got Winco, Fred Meyer, Walmart, Target and Grocery Outlet. You've got a number of competitors that are price-oriented that are going to have to keep these stores honest in price," the analyst said in an interview with public radio.

Haggen filed for bankruptcy in September of last year. By that time, Haggen and Albertsons had sued and countersued each other for alleged dirty dealing in the handover of operations during the original sale. Those suits were settled early this year.

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Haggen stores included in the newly-approved Albertsons purchase agreement:

Oregon:

  • 1800 NE 3rd Street, Bend
  • 1675 W. 18th Avenue, Eugene
  • 16199 Boones Ferry Road, Lake Oswego
  • 1690 Allen Creek Road, Grants Pass
  • 61155 S Hwy 97, Bend
  • 14300 SW Barrows Rd, Tigard
  • 3075 Hilyard St., Eugene

Washington:

  • 8611 Steilacoom Blvd. SW, Tacoma
  • 1128 N. Miller, Wenatchee
  • 450 N. Wilbur Avenuella Walla
  • 17171 Bothell Way NE, Seattle
  • 3520 Pacific Ave SE, Olympia
  • 3925 236th Ave NE, Redmond
  • 17520 SR 9 Southeast, Snohomish
  • 31565 Sr 20 #1, Oak Harbor
  • 2814 Meridian, Bellingham
  • 757 Haggen Drive, Burlington
  • 1406 Lake Tapps Parkway East, Auburn
  • 1401 12th Street, Bellingham
  • 1313 Cooper Point Road SW, Olympia
  • 210 36th Street, Bellingham
  • 2900 Woburn Street, Bellingham
  • 26603 72nd Avenue NW, Stanwood
  • 1301 Avenue D, Snohomish
  • 1815 Main Street, Ferndale
  • 17641 Garden Way NE, Woodinville
  • 2601 East Division, Mount Vernon
  • 8915 Market Place NE, Lake Stevens
  • 3711 88th Street NE, Marysville

Haggen stores which were not purchased:

  • 19701 Highway 213, Oregon City, Oregon
  • 201 37th Avenue SE, Puyallup, Washington
  • 114 E. Lauridsen Blvd., Port Angeles, Washington

The three unsold stores will now have going out of business sales.

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