Can Albertsons buy back stores from Haggen? FTC agreement casts doubt

Can Albertsons buy back stores from Haggen? FTC agreement casts doubt

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Filed on 13. Nov, 2015 in Contents, Features

Albertsons outbid competitors on 33 closing Haggen stores in an auction this week at the Hyatt Regency Century Plaza in Los Angeles. But an agreement between Albertsons and the Federal Trade Commission casts doubt on whether the grocery giant will be able to go through with the purchases.

Albertsons or Safeway used to own every one of those stores, but were forced by the FTC to sell them — along with 135 others — before the two companies could merge. The reason? The merger would have given Albertsons an unfair advantage in those market areas and potentially hurt consumers.

After the order, Bellingham-based Haggen bought 146 stores from Albertsons and Safeway, and started losing money at nearly all of them within months. Haggen filed for chapter 11 bankruptcy on Sept. 8, and this week’s auctions were part of Haggen’s ongoing bankruptcy process.

The FTC’s agreement with Albertsons seemed to take into account the possibility of Albertsons buying back stores from Haggen.

“For a period of 10 years, Albertsons is required to give the commission prior notice of plans to acquire any interest in a supermarket that has operated or is operating in the counties included in the relevant markets,” reads a proposed agreement published in the Federal Register on February 3, 2015, between Cerberus Capital Management — the private equity owner of Albertsons — and the FTC.

Unless market conditions have changed in the areas where the FTC ordered Albertsons to divest stores, it seems the purchases would still result in an “anticompetitive” situation.

The FTC wouldn’t comment on whether they would need to review or approve Albertsons’ purchases. An Albertsons spokesperson didn’t respond to a request for comment either.

Two of the stores that Albertsons wants to buy from Haggen have back up bidders: Regency Centers, a commercial real estate developer, is listed as the back-up bidder on a Haggen store in Everett. Peckham Properties Inc., also a commercial real estate developer, is the back-up bidder on a La Mesa, California, store. The other 31 stores sought by Albertsons don’t have back-up bidders.

The United Food and Commercial Workers union, which represents the majority of Haggen employees, announced their support for Albertsons in a press release on Nov. 13. The union also represents Albertsons employees.

“We look forward to working with Albertsons to ensure that these stores are a success, and that the hard-working men and women are able to continue serving their communities and earning the wages and benefits they deserve,” the union said in a prepared statement. “For stores that were sold to other employers, we are actively seeking opportunities to negotiate with new owners so that we can quickly secure jobs and peace of mind for our hard-working members.”

In total, 95 closing Haggen stores were to be included in this week’s auction, according to court filings. Of those, documents show that 55 received bids.

Albertsons placed the highest bid on 12 of 13 auctioned stores in Washington state. Albertsons plans to convert former Haggen stores in Milton, Puyallup, Renton, Monroe, and two stores in Burien to the Albertsons brand. Former Haggen stores in Gig Harbor, Spanaway, Port Orchard, Shoreline, Renton, and Everett, would be converted to Safeway.

The one Washington store that Albertsons didn’t buy — a former Haggen in a Spokane suburb called Liberty Lake — went to Yoke’s Fresh Market, a grocery chain based in Spokane.

Top bidders for Haggen stores outside the state include Smart & Final (four stores), Sprouts Farmers Market (four stores), and Tawa Supermarket (three stores).

Court documents didn’t include prices for the auctioned stores.

Interested parties have until 6 p.m. Eastern time Thursday, Nov. 19 to object to the proposed sales. A sale hearing is scheduled for Nov. 24.

This week’s auction’s didn’t include any of Haggen’s Whatcom County locations. Those are scheduled to be auctioned Jan. 8.

Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com

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IFRoZSBKb3VybmFsPC9saT48L3VsPg==