Finally, the Deal Is Done; but Who Will Get Ralphs?

One sure result of Friday’s agreement on the sale of Federated Department Stores is the sale of its Ralphs supermarket chain.

But while speculation focused on Lucky Stores or Ralphs management, the ultimate buyer is about as certain as a game of musical chairs.

From the outset of its campaign to acquire Federated in January, Campeau Corp. signaled its intention to unload Ralphs if the takeover succeeded. The only grocery store among Federated’s numerous department store holdings, an eventual sale has been a foregone conclusion.

But the announcement of the final $6.64-billion sale of Federated to Campeau made no mention of Ralphs. At the Compton headquarters of the 129-store Southern California chain, Ralphs Chairman Byron Allumbaugh referred all inquiries to Federated and went home. Lucky Stores also had no comment.

Allumbaugh led a management group that previously offered Federated $955 million for Ralphs. But Robert Campeau, chairman of the Toronto development firm, has said that isn’t enough. A higher bid by Lucky, based in Dublin, Calif., was apparently more to Campeau’s liking.

Although Ralphs’ 16,000 employees fear the layoffs that would presumably result from a sale to a competitor, there are reports that Lucky might have stepped up its efforts to buy Ralphs to help it fend off its own would-be suitor, American Stores. American Stores--which owns the Alpha Beta grocery chain, among others--recently offered to buy Lucky for $1.7 billion.

In the waning days of the Federated-Campeau negotiations, reports surfaced that Lucky had offered to loan Campeau $300 million to aid its takeover effort in return for Campeau’s help with the Ralphs’ deal. The idea is that in order to buy Ralphs, Lucky would have to take on so much debt that it would no longer be attractive as a takeover target. There has been no confirmation of such a role by Lucky, and there were analysts who discounted it Friday.