[Vision2020] Albertsons will stay: Boise company could sell only underperforming stores

[TIM RIGSBY]

Great news for Idaho!

Article published Dec 23, 2005

Albertsons will stay
Boise company could sell only underperforming stores

Albertsons Inc. is no longer for sale and will keep its corporate 
headquarters in Boise, the company's chief executive officer said Thursday 
night.

"It is business as usual, and we're going to continue operating here in 
Boise," Larry Johnston, president, chairman and CEO of Albertsons said in an 
exclusive interview with The Idaho Statesman. "We will no longer be focusing 
on the sale of the company. We plan to continue to grow our profitable 
grocery business, create a more compelling shopping experience and grow our 
free-standing drugstore business."

Johnston said the board of directors decided to halt efforts to sell because 
"put simply, we did not receive a bid that we could accept."
He said the company will continue to discuss selling off its 
"underperforming assets" with several parties.

Thursday's announcement puts an end to months of speculation and worry that 
a sale of Albertsons would mean the loss of its Boise headquarters, with 
about 2,500 corporate jobs and an estimated $11 million in state and local 
taxes.
Even though Albertsons' future remains unclear, local leaders heaved a sigh 
of relief at Thursday's announcement.

"That's a heck of a Christmas present," said Boise Mayor Dave Bieter.

Bieter said he had hoped this would happen, but had become less optimistic 
in recent weeks. The mayor was mostly worried that the top bidders looked 
like they might move Albertsons headquarters out of Boise, where the grocery 
chain started in 1939.
"I was awfully nervous about it," he said.

Other local officials said the news was exciting but still unclear.
"I'm breathing a sigh of relief, but it may be shortlived," said Mike 
Ferguson, the state's chief economist. "The bottom line is it sounds as 
though things are still up in the air and the situation is fluid."

Jim Everett, chief executive officer of the Treasure Valley YMCA, called the 
news "encouraging" but said he wants "to learn a little more."

"My initial reaction is that's fabulous, especially if it means the 
corporate headquarters stays here and it can be a Boise-based company," 
Everett said. "It's nothing but good news. I am elated. Having said that, I 
am anxious to hear what that all means."
Everett and the leaders of other local non-profit and charitable 
organizations were disappointed to hear in September that Albertsons was 
putting itself up for sale and might leave Boise. Since Joe Albertson 
started the company 66 years ago, Albertsons has been a major economic and 
charitable presence in Boise.

Last year alone, the company donated about $2.5 million to charities 
throughout the Treasure Valley. Joe and Kathryn Albertson were also 
responsible for helping Albertson College of Idaho out of financial trouble 
and founding the Albertson Foundation, which had raised about $244 million 
for education in Idaho as of last year.
A retail industry analyst called Albertsons' announcement Thursday night "a 
very smart move" for the company.

"This is something we expected way back in the beginning. Albertsons is such 
a strong franchise that it makes sense for them to sell underperforming 
assets," said Burt Flickinger III, managing director of the Strategic 
Research Group, a New York-based retail consulting firm.

The company did not define what underperforming assets it was looking to 
sell.
But Albertsons' grocery stores in Florida and Texas — where the company 
faces heavy competition from Wal-Mart Supercenters — are likely to be sold 
off first, Flickinger said.

The company's Sav-on and Osco drug stores could also be sold for a high 
price, he said.
Flickinger said the company's decision to remain in Boise was a good one.

"The people of Boise are one of the crown jewels of the company because they 
have a tremendous work ethic and they've got folks with institutional 
knowledge and a can-do attitude," he said.

Ferguson said selling the underperforming assets is far better for Boise 
than selling off all of Albertsons. But he said it is still too early to 
tell how Boise and the local economy will be affected by this announcement.
Albertsons' announcement was released about the same time Thursday night 
that Minnesota-based grocery chain SuperValu Inc. and drug store chain CVS 
Corp. announced they had terminated all bid discussions with Albertsons. 
Both SuperValu and CVS were reportedly part of a buyout group that had been 
the leading bidder for Albertsons.

On Wednesday, Albertsons' board of directors terminated negotiations with a 
buyout group that included SuperValu, CVS, private investment firm Cerberus 
Capital Management and Kimco Realty Corp., a real estate investment company, 
according to The New York Times. The Times said the group offered $9.6 
billion, or $26 a share, for the entire company.
Albertsons' stock had closed Thursday down 3.4 percent, at $23.28, several 
hours before the company's announcement.

Earlier in the morning, the company's stock had fallen more than 6 percent 
to $22.60 after The New York Times report.



Revolution is not a word but an application; it is not war but peace; it 
does not weaken, but strengthens. Revolution does not cause separation; it 
generates togetherness.
-John Africa, Strategic Revolution

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