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ALBERTSON'S/AMERICAN DEAL ON TRACK

OAK BROOK, Ill. (FNS) -- Albertson's and American Stores Co. expect to complete their merger by January, Greg Josefowicz, executive vice president and general manager of American's Jewel-Osco division, told the Merchandising Executives Club of Chicago here.Albertson's, based in Boise, Idaho, and American Stores, Salt Lake City, announced plans in early August to merge. Each company has scheduled shareholders'

OAK BROOK, Ill. (FNS) -- Albertson's and American Stores Co. expect to complete their merger by January, Greg Josefowicz, executive vice president and general manager of American's Jewel-Osco division, told the Merchandising Executives Club of Chicago here.

Albertson's, based in Boise, Idaho, and American Stores, Salt Lake City, announced plans in early August to merge. Each company has scheduled shareholders' meetings on Thursday to vote on the merger.

The Federal Trade Commission filing on the merger "is going along pretty well," Josefowicz said, as are negotiations with state attorneys general in California and Nevada, where the two chains' trading areas overlap.

After recommendations of the transition teams are reconciled, "we expect to have a design rollout in December and will be done in January," Josefowicz said.

Josefowicz said he would become president of the Midwest region of the new Albertson's, which he said is likely to have a more local focus on buying than American Stores' centralized approach.

"I believe the path toward a heavily centralized marketing and sales function will stop and become more locally focused," Josefowicz told the local merchandising executives.

Josefowicz also confirmed reports that Kmart Corp., Troy, Mich., was originally a party to the negotiations of American and Albertson's.

"There was a third group that was part of these conversations, that actually provoked the conversations, and that was Kmart," he said. "They've excluded themselves from further negotiations, and American Stores and Albertson's are continuing to talk and move ahead."

He said Albertson's Midwest region, which would encompass the Jewel-Osco units, would continue its expansion into Wisconsin. Jewel, which will celebrate its 100th anniversary in 1999, opened two more stores in Milwaukee Oct. 29, Josefowicz said.

He said American's successful private-label program was one of the factors that made the chain attractive to Albertson's, describing Albertson's private-label program as "underdeveloped" by industry standards, generating only 15% of sales.

In response to an audience question, he said Jewel's Preferred Card frequent-shopper program probably would remain in place and might be adopted by some Albertson's divisions.

According to Josefowicz, Albertson's was interested in American Stores for four main reasons: the "drug competency" of the company's combination food and drug units; its private-label penetration; the systems development that's under way, and its "urban presence, especially in southern California."

The merged chain would have about 300 stores in southern California when Albertson's and Lucky Stores there are combined, he pointed out.

He said one reason American Stores was interested in a merger was the "shared heritage" of the two companies, going back to the Skaggs-Albertson's stores they operated together in Texas beginning in the 1970s.

Another strong incentive, he said, was Albertson's strong operations. "It has the highest operating profit of any publicly held supermarket company, which is one of the principal reasons the emerging corporation will be called Albertson's."

Albertson's focus on efficiency was also attractive to American, Josefowicz said.

"And finally, we were facing the question how to achieve growth, and we seem to have found a good partner," he added.

Discussing general industry trends, Josefowicz said he was bullish on the future of food-drug combination stores, citing not only pharmacy growth as baby boomers age but also more consumer awareness of health issues.

"Consumers' perception of food is changing," he said, from a view of food as necessary for survival to a view of food as recreation -- hence the popularity of eating out -- and to a future view of food as a way to physical well-being. "We'll eat foods because they're good for us and don't taste like medicine," he said.

He also predicted increasing partnerships and alliances between supermarkets and suppliers to leverage growing amounts of data; a renewed focus on marketing to the local customer, even by global brands, and more emphasis on community relations.