Associated Food Stores, parent of Macey’s and other grocery stores, will buy 36 Albertsons stores in Utah — including five in Utah County — along with related pharmacies and fuel centers in a deal that will give the Salt Lake City-based grocery chain significantly greater statewide market share.

The deal, announced Tuesday, also means that the local retail presence of Albertsons will shrink dramatically after nearly 60 years of operating in the Beehive state.

Once the deal is completed in late fall, Associated Food will have a total of 58 company-owned stores, up from an existing 22 stores. Its supermarket banners include Macey’s, Dan’s, Lin’s and Dick’s. Its wholesale grocery membership will climb to 540 stores from the current 504, while its total employee base in Utah will jump to 7,700 from 5,000.

Officials of both companies declined to specify the costs of the acquisition, but Supervalu, owner of Albertsons, said in Tuesday’s announcement that it will realize about $150 million in after-tax net proceeds from the sale.

Under the deal, 2,700 employees of Albertsons will be retained by Associated Food, and the 36 stores will be managed by Senior Vice President Dick King, who had served with Albertsons for 36 years and was former president of the company before joining Associated Food in 2003.

The deal excludes two Albertsons stores in Orem, and two in West Jordan, which are up for sale separately and will continue to be run by Supervalu until a buyer is found.

“For various reasons, those four stores aren’t part of our future plans,” said Bret Gallacher, Associated Food spokesman. He declined to specify the reasons.

Associated Food’s senior management, including King, began visiting the 36 Albertsons stores Tuesday and will continue to do so over the next few days to reassure employees, who were notified of the sale Tuesday morning, and to talk with customers about pending changes.

“Customers have been asking us questions about what changes they can expect to see, but the associates are mostly excited about being attached to a local company,” said Neal Berube, chief operating officer of Associated Foods. Supervalu is based in Minneapolis.

News of the pending sale drew mixed reactions from shoppers at the University Parkway Albertsons in Provo on Tuesday, while at least one worker was worried about the impact of the ownership change on employee benefits.

Price perceptions

Courtney Wayment, a Brigham Young University student who shops at the Provo store at least three times a week, said she would miss the brand.

“I like their 10 for $10 sales. For college students, that’s good, and the Provo store is much closer for me” than Wal-Mart in Orem. Wayment said. “Albertsons has better selections and prices for cosmetics and lotions. I don’t really like Macey’s because their cosmetics prices are higher.”

Despite perceptions that Albertsons’ produce prices tend to be higher than other local grocers, Wayment said she prefers to shop for fresh fruit and vegetables at the Provo store.

“You just have to find the sales, and when I see it, I stock up,” she said. “I’m big on quality of produce. I don’t like poor-quality produce for low prices. Plus, I’m from Spokane, Wash., and Albertsons is one of the cheaper grocery places there, so I guess I’m used to shopping at the store.”

Another shopper, Kelly DeSouza of Spanish Fork, was mostly nonchalant:

Albertsons’ “prices are kind of high. I don’t really go there that much, so I’m not really too sad about it. I’m just here to get the water.”

Gallacher, of Associated Food, said several Albertsons stores “definitely have a price perception problem. And that’s one of the things we need to fix. The first thing we expect to be able to do is to lower prices on items that people need the most.”

“We’ll be replacing the Albertsons private label brand with our Western Family brand,” he said. “We will concentrate on value pricing and fresh products at the 36 stores.”

Gallacher said the acquisition will enable the grocery cooperative to “buy more efficiently and help reduce its overhead costs.”

“The Albertsons stores each average about 47,000 square feet, which makes it comparable to Dick’s in size. Our Macey’s store is a lot larger, about 65,000 square feet to 70,000 square feet,” he said.

New name

Also unspecified is the new name for the 36 stores.

“It’ll be a name that’s recognized by the people in Utah,” Berube said, adding that two or three names are now being considered. The four existing Associated Food banners were named for their founders.

For now, the 36 stores will continue to bear the Albertsons name until the acquisition is completed by the end of fall.

After the sale, Supervalu will have three Albertsons stores left in the St. George area and a Salt Lake City distribution center that will continue to serve Albertsons stores in Idaho, Wyoming and Montana. Supervalu will have around 460 Albertsons stores left nationwide.

“While this was a difficult decision due to the impact on our associates and the Utah community, the sale of these stores will allow the company to focus on our greatest growth opportunities while at the same time monetize non-strategic assets for debt paydown,” Craig Herkert, Supervalu’s CEO, said in a statement Tuesday. Proceeds from such moves could also help Albertsons retire a portion of an $8.5 billion debt load.

Albertsons officials declined to outline Supervalu’s plans for the Utah market after the sale.

“At this time, our focus is on a seamless transition for our associates and customers,” said Stephanie Martin, Albertsons’ director of communications and public affairs.

Founded in 1939, Albertsons was acquired in 2006 by an investor group led by Supervalu for $9.7 billion in cash and stock.

Dave Wirthlin, president of Associated Retail Stores, which manages Macey’s, Dan’s, Dick’s and Lin’s, said negotiations with Supervalu began in February.

“We began talking a few months ago because of the changes in the marketplace, and changes in Supervalu’s position and focus on other areas that have more opportunities,” he said.

Supervalu’s fiscal first-quarter earnings dropped 30 percent as the supermarket chain reported lower sales and margins.

Performance issues

Supervalu CEO Craig Herkert told the Wall Street Journal that the grocery giant’s sales promotions had not met expected results, saying that price-conscious consumers were snapping up discounted items and not tossing enough regular-priced goods into their carts.

Herkert, a former Wal-Mart executive who started his current role in June, called the price difference between discounted and regular items “unsustainable” in a conference call Tuesday to discuss fiscal first-quarter results with analysts.

Last month, the company warned that its results were lagging as consumers grew more value-focused and cautious, the Wall Street Journal reported. For the period that ended June 20, the supermarket operator posted earnings of $113 million, or 53 cents a share, down from $162 million, or 76 cents a share. Excluding store closings and one-time acquisition-related costs, earnings fell to 55 cents a share from 79 cents a share.

Revenue slid 4.7 percent to $12.72 billion for Supervalu, whose chains include Acme, Jewel-Osco and Shaw’s.

Shares of Supervalu, which have been rising since hitting a nearly seven-month low in early July, closed Tuesday’s trading session at $14.34, up 2.5 percent or 35 cents a share. In after-hours trading, the stock gained nearly 1 percent, or 14 cents a share to $14.48.