Monday, May 12, 1997 | 11:59 a.m.
Customers of Smith's Food & Drug Centers won't see many changes following today's announced merger with Portland, Ore.-based Fred Meyer Inc., forming a company with $7 billion in annual sales.
Smith's, which operates 19 stores in the Las Vegas Valley and 22 in Southern Nevada, including four discount warehouse stores known as Price Rite, said Fred Meyer will buy the company for $1.95 billion in stock and assumed debt, creating one of the largest U.S. supermarket chains.
"This is very exciting for the company, very good news for the company," said Shelly Thomas, a spokeswoman for Salt Lake City-based Smith's.
The company's increased buying power should allow it to get more competitive prices on merchandise, which could translate to lower prices for consumers at the checkout stand, she said.
Although the new company will take on the name Fred Meyer, the local stores will keep the Smith's name and signs. No closures are expected as a result of the merger.
Fred Meyer will pay 1.05 of its common shares for each of Smith's shares, for a total of $695 million, and assume $1.25 billion in debt. The purchase values Smith's shares at $43.97 each, based on Fred Meyer's closing stock price Friday of $41.875.
The Fred Meyer chain is unusual in that 113 of its 222 general-merchandise stores include grocery stores -- a strategy that retailers such as Wal-Mart Stores Inc. and Kmart Corp. have adopted in recent years.
"The purchase was somewhat of a surprise because their format has been unique. I didn't think there was an obvious acquisition or merger candidate," said Sally Wallick, an analyst with Legg Mason Wood Walker.
The purchase would give Fred Meyer about $7 billion in annual sales, making it the 13th-largest U.S. grocery chain, according to trade magazine Supermarket News. Fred Meyer ranked 24th in 1996 with $3.8 billion in sales, while Smith's was 31st with $2.9 billion.
RICHARD N. VELOTTA of the SUN and Wes Conard of Bloomberg Business News contributed to this report.