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Gelson’s Markets and Jons Marketplace are in talks to move into Ralphs neighborhood. The two grocery chains are interested in acquiring some of the 19 stores that Ralphs Grocery Co. must divest as a result of its planned merger with Hughes Markets Inc. The State Attorney General ordered the divestiture last month to keep the merged chain from being too dominant in some of the communities it serves. Six of the stores to be sold are in Valley locations in Canoga Park, Chatsworth, Northridge, Studio City, and Sherman Oaks. All but one are Ralphs units. “Some of the properties look very appealing,” said a Gelson’s official, who asked not to be identified and who would not specify the properties under consideration. The upscale chain currently operates six of its 10 groceries in the Valley, offering its customers a greater selection of higher grade and often higher priced meats and fresh fish than chains like Hughes and Ralphs. The Gelson’s stores are in Calabasas, Encino, Tarzana, Westlake Village and Northridge. Gelson’s, owned by Los Angeles-based Arden Group Inc., can mostly be found in affluent neighborhoods where customers favor gourmet foods and large wine selections. Some of the Valley neighborhoods, where Ralphs and Hughes stores operate, fit that bill. “Most of these (Ralphs and Hughes) stores are in locations where people appreciate a little bit better grade of produce and meat,” said Dick Carter, senior retail specialist with Beitler Commercial Realty Services in Brentwood. As for Los Angeles-based Jons Marketplace, only one of its 11 L.A. County stores is in the Valley in Van Nuys. Company president John Berberian said he is investigating the purchase of some of the Valley Ralphs and Hughes stores. “We still have to look at things like what the price will be for the stores, but we are interested in them,” Berberian said. Many of the Jons markets are in lower income areas. The chain is known for tailoring its stores’ respective product lines to the ethnic make-up of the neighborhoods that surround them. Colton-based Stater Bros. Markets is also considering buying some of the Ralphs and Hughes units, said the company’s president and president Jack H. Brown. However, it is only interested in stores in the eastern reaches of Los Angeles and Orange counties. Ralphs spokesman Ari Swiller said the company has received inquiries “from a full range of companies.” Potential buyers will have to be approved by the Attorney General, but these companies may face another, unexpected stumbling block, at least in one community. “We are polling our membership to see what kind of markets they would like to see buy the stores,” said Tony Lucente, president of the Studio City Residents Association, which will present the poll results to the attorney general’s office. “I think we had an influence on the divestiture, and I think we can have an influence on what happens next with the stores.” Ralphs curently has 183 stores in Los Angeles County and holds the highest market share in the county at 26.86 percent, according to the Shelby Report, a Gainesville, Ga.-based industry publication. With a 5.84 percent market share, Hughes is No. 4 in the county. Some of the Hughes stores will retain their name even after Ralphs acquires them, Swiller said, in order to ensure that customers loyal to Hughes will continue to shop there. He said it had not been determined which ones will retain the Hughes name. The Federal Trade Commission has approved the merger, which was announced in November. Ralphs and Hughes have until Aug. 13 to present the attorney general’s office with purchase agreements or letters of intent from proposed buyers for 13 of the stores. The chains will have an additional three months to find proposed buyers for the other six stores. As for the purchase prices, several factors go into arriving at a sum, according to Chuck Ceranosky, a supermarket analyst with the Boston-based Tucker Anthony, Inc. A supermarket with plentiful customer traffic and/or is in a middle- or upper-class community, and whose building and premises are in good condition, can sell for between six and eight times its annual revenues.

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