Fleming Draped in Furrs

Fleming Cos. (Lewisville, Texas), operator more than 90 Food 4 Less, Rainbow Foods and Yes!Less supermarkets (as well as IGA and Piggly Wiggly franchises) expects bankruptcy court approval for its buyout of Furrs Supermarkets (Albuquerque, N.M.). Fleming has offered $100 million for the bankrupt grocery retailer's assets.

Furrs, which operates nearly 70 grocery stores throughout New Mexico and West Texas, has been operating under Chapter 11 bankruptcy protection. when it auctioned off its assets last month, Fleming won the bid, saying it would sell most of the stores to independent grocers when the deal is complete. Fleming, also the nation's second-largest wholesale food distributor, had been a major shareholder of and creditor to Furrs until last year. When Furrs declared bankruptcy, Fleming hired president, ceo and chairman Tom Dahlen, who is now president of retail at Fleming.

Among the names circulating behind the Fleming-Furrs transaction is billionaire Ron Burkle, the mega-financier of grocery chains who purchased an 8.7 percent share of Fleming ($50 million in stock) a month before Furrs filed for bankruptcy court protection, with options to buy another 8.7 percent. Burkle had previously worked with several Furrs executives, including Dahlen, at Los Angeles-based Ralph's Grocery Co. when it was owned in part by Burkle. It was Burkle who engineered the mergers, valued at $5 billion, in which Ralph's and Smith's Food & Drug Centers were acquired by Fred Meyer in 1997. Burkle then became chairman of the board for Fred Meyer, remaining on the board when Fred Meyer merged with Kroger in May 1999, a $13.5 billion deal that produced the largest grocery chain in the nation. (Most recently, after purchasing large stakes in both Kmart Corp. and Fleming, Burkle arranged an exclusive 10-year supply agreement between the two companies valued at $4.5 billion.)