Mega Supermarket Merger

Albertsons acquires Tom Thumb in supersize supermarket merger

Albertsons acquires Tom Thumb in supersize supermarket merger

Tom Thumb grocery store at Plaza at Preston Center
Tom Thumb, there is a new sheriff in town. Photo courtesy of Plaza at Preston Center

After months-long speculation, Tom Thumb has new ownership that will see it merge with a competing supermarket chain: Albertsons. Tom Thumb's parent company, Safeway, agreed to be acquired by Cerberus Capital Management, which owns the Albertsons chain.

The two grocery retailers will continue as is until the merger is completed later in 2014.

According to a March 6 release by Albertsons, the merger will create a network of more than 2,400 stores, 27 distribution facilities and 20 manufacturing plants with more than 250,000 employees. No store closures are anticipated. Albertsons CEO Bob Miller will become executive chairman, while Safeway's CEO Robert Edwards will become president and CEO.

Safeway is the second largest grocery chain in the country; Albertsons is the fifth largest.

The new uber-company will include Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw’s, Star Market, Super Saver, United Supermarkets, Market Street (which Albertsons acquired in September 2013) and Amigos.

The other big chains are Kroger and Walmart, while the Fort Worth Star-Telegram lists the many players in the local grocery scene, including Whole Foods, Central Market/H-E-B, Sprouts, Aldi's and Trader Joe's.

Veteran supermarket watcher Maria Halkias surmises that the Federal Trade Commission will scrutinize Dallas-Fort Worth carefully for antitrust issues in its review of the merger. (Albertsons' statement says that Safeway has a "go-shop" period of 21 days to entertain alternative proposals.)

Tom Thumb has 62 stores around Dallas-Fort Worth, most located in nicer parts of town; Albertsons has 49. Cerberus, a wheeling-and-dealing private equity firm, has behaved like an abusive parent to Albertsons since it acquired the chain in 2006. The stores have experienced a drastic decline in quality, selection and overall appeal.

And while they say there won't be closures, that would not fit with their history of slashing and burning stores. Three weeks ago, they shut down 26 stores around the country, the day before their fiscal year ended. That follows major closures that took place in 2006, 2011 and 2012.

Tom Thumb recently announced the shuttering of its small but high-profile store in Highland Park Village.