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Haggen acquiring 25 Vons and Albertsons in SD

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Haggen Inc., a Bellingham, Wash.-based grocery store chain, announced late Friday that it has agreed to acquire 146 stores, including 25 in San Diego County, as a result of the merger of the Albertsons and Safeway Inc. (NYSE: SWY) chains.

The local grocery stores that are being acquired as a result of the forced divestiture include Vons stores at 505 Telegraph Canyon Rd., 360 East H St., and 870 Third Ave. in Chula Vista; 3681 Avocado Ave., and 5630 Lake Murray Blvd. in La Mesa; 2800 Fletcher Parkway, and 13439 Camino Canada in El Cajon; and 671 Rancho Santa Fe Road in San Marcos. Vons is a division of Safeway.

The Albertsons stores are located at 955 Carlsbad Village Drive and 7660 El Camino Real in Carlsbad; 2707 Via de la Valle in Del Mar; 1608 Broadway Street in El Cajon; 14837 Pomerado Road in Poway; 9870 Magnolia Ave. in Santee; 422 W. Washington St. in Hillcrest; 2235 University Ave. in North Park; 730 Turquoise St. in Pacific Beach; 5950 Balboa Ave. in Kearny Mesa; 150 B Ave. in Coronado; 10740 Westview Pkwy. in Mira Mesa; 14340 Penasquitos Drive, and 7895 Highland Village Place in Rancho Penasquitos; 10633 Tierrasanta Blvd. in Tierrasanta; 12475 Rancho Bernardo Road in Rancho Bernardo; and 350 W. San Ysidro Blvd. in San Ysidro.

Founded in 1933, Haggen is one of the Pacific Northwest's leading grocery chains. The company operates stores in Washington and Oregon under the Haggen Northwest Fresh banner. It is the state's sixth-largest private company with the majority of shares owned by Comvest Partners.

"Haggen has focused on being local, and we will continue to focus on being local with this expansion," said a company spokesperson. "Decisions will be made based on our customers’ local tastes, wants and traditions in the neighborhoods where we are located."

For more than 80 years, Haggen has supported regional farms, ranches, fisheries and other businesses, creating a lasting and sustainable local food economy.

Along with the California stores, the acquisition includes grocery stores in Oregon and Washington, where the firm already has a sizable presence, as well as Nevada and Arizona.

With the acquisition, the company will grow from 18 stores with 16 pharmacies to 164 stores with 106 pharmacies, and from 2,000 employees to more than 10,000 employees.

This latest transaction follows private equity firm Cerberus Capital Management's $9.4 billion acquisition of Pleasanton-based Safeway last July. That transaction, completed earlier this year, merged Safeway with Boise, Idaho-based Albertsons, which Cerberus already owned.

After the close of the transaction in January, Haggen will convert all of the acquired Albertsons and Safeway stores to the Haggen banner in phases during the first half of next year. The Albertsons, Vons and Safeway stores that aren't part of this transaction are expected to remain as they are today.

“With this pivotal acquisition, we will have the opportunity to introduce many more customers to the Haggen experience," said John Caple, chairman of the Haggen board of directors and partner at Comvest Partners, a private investment firm.

"Our Pacific Northwest grocery store chain has been committed to local sourcing, investing in the communities we serve, and providing genuine service and homemade quality since it was founded in 1933. We will continue our focus on sourcing and investing locally even with this exciting expansion.”

Comvest Partners provides equity and debt capital to middle-market companies across the U.S. With more than $1.8 billion of assets under management, the firm has invested more than $2 billion of capital in more than 140 public and private companies.

Bill Shaner, Haggen Pacific Southwest CEO, said plans call for renovating the stores that need it and simple cosmetic changes for those stores that are up to date.

"We have plans for every store," Shaner said. "Some of the stores don't require much."

Since Haggen is an unknown entity in San Diego County, Shaner said, "We are in the process of interviewing branding and marketing firms."

He emphasized that it isn't the intent to make the stores homogeneous.

"They will reflect the neighborhood," Shaner said. "There will be a lot of variation."

All Albertsons and Safeway store employees will have the opportunity to become employees of Haggen as their individual stores are transitioned to the Haggen banner. Haggen plans to retain the current store management teams.

The company will be led by CEOs John Clougher and Bill Shaner. Clougher, CEO, Pacific Northwest, will have primary responsibility for the northern division of Washington and Oregon. Shaner, CEO, Pacific Southwest, will have primary responsibility for the southern division of California, Nevada and Arizona. The two will work together to steward the company’s commitment to its employees, customers, business partners and stakeholders.

“We committed to this acquisition because we knew we had the experience, talent and drive to get it done,” Caple said. “The strength of our management and store support teams, combined with the talent of the store teams at each of the new store locations, will enable Haggen to be a successful West Coast grocer.”

Sagent Advisors LLC and HFF acted as financial advisers to Haggen on the transaction. Akerman Senterfitt LLP acted as legal adviser.

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