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Haggen agrees to sell 29 stores to Albertsons

$106 million deal includes Lake Oswego and Tigard locations; seven others are slated to close within 60 days of court approval

REVIEW FILE PHOTO: VERN UYETAKE - Haggen Food & Pharmacy's Lake Oswego location, which was one of 33 'core' stores slated for auction on March 18, will instead be sold back to Albertsons.Haggen Food & Pharmacy announced Friday evening that it has accepted a bid from Albertsons to acquire 29 of its "core" stores — including the Lake Oswego location on Boones Ferry Road and another in Tigard — and has now canceled an auction scheduled for March 18.

The $106 million agreement with Albertsons remains subject to finalizing documentation and requires U.S. Bankruptcy Court approval. Haggen said it expects the court to rule on the sale and other motions at a hearing on March 29.

As part of the agreement, 15 stores originally owned by Haggen will continue to operate under the company's banner as a division of Albertsons LLC. The others will transition back over time to the Albertsons name they carried before they were bought and converted in 2015.

"We are excited about the opportunity to have the backing of Albertsons and look forward to be part of the Albertsons grocery family," Haggen CEO John Clougher said Monday.

Three "core" stores, including one on Highway 213 in Oregon City and two in Washington, are not included in the deal with Albertsons and will be closed. Haggen said it will seek court approval to begin going-out-of-business sales for those three stores; on Friday, the company alerted state officials about the pending store closures, which are expected to occur within the next 60 days and affect 215 workers (including 70 in Oregon City).

In addition, Haggen has already filed a motion with the bankruptcy court to begin going-out-of-business sales for four non-core stores — in West Linn and Clackamas in Oregon, and in Federal Way and Burien, Wash. Haggen told state officials last week that those stores are expected to close permanently by May 9, resulting in the layoffs of 263 employees (including 68 in West Linn and 70 in Clackamas).

In a website posting to its members last week, the United Food & Commercial Workers Union said it would be scheduling meetings for dislocated workers "as soon as possible."

"These meetings will inform you about how this will impact health and welfare and pension benefits," the union said.

Haggen exploded onto the Portland grocery scene in 2015, opening 10 stores in the metro area as part of a 146-store buyout during the Albertsons-Safeway merger. The Federal Trade Commission ordered the two supermarket giants to sell off the stores as part of the merger.

But the rollout was far from smooth. Albertsons sued Haggen for more than $36 million, saying the grocer failed to pay for 38 stores. Haggen filed a $1 billion countersuit, and announced it would close several stores in Oregon, Washington, California, Nevada and Arizona.

In September, the company filed for Chapter 11 bankruptcy.

As part of those bankruptcy proceedings, the company auctioned off 91 stores in November. Albertsons, the former owner of many of those stores, bought back 33 of them, including Oregon locations in Baker City, Eugene, Springfield and Ashland.

At that point, Haggen said it would focus on its “core” stores and one stand-alone pharmacy in the Pacific Northwest. Those locations included 16 stores and the pharmacy previously owned by Haggen, as well as others — including the Lake Oswego and West Linn locations — that were acquired from Albertsons and Safeway earlier in the year.

But those plans were squashed by the order signed in December by U.S. Bankruptcy Judge Kevin Gross, who ordered the chain to find new owners.

The auction of "core" stores, which was originally scheduled for January and then moved to a succession of dates in February, was expected to finally take place in a New York City law office on March 18. The agreement announced Friday with Albertsons eliminates the need for that auction altogether.

Neither Albertsons nor the FTC responded to requests for comment this week. But the FTC told The Seattle Times on March 10 that while the original sale of Albertsons stores didn’t accomplish “the full results we were looking for,” meaning a new supermarket competitor in the area, at least “most of the divested stores remain supermarkets.”

“It’s best for consumers that these stores continue operating,” even if it’s under Albertsons’ brand, the FTC said.

Contact Gary M. Stein at 503-636-1281 ext. 102 or gstein@lakeoswegoreview.com.