Valero Strikes Deal with Albertsons

In a sign that Albertsons may be getting out of the fuel business or at least sharply centralizing its fuel operations, San Antonio-based Valero Energy Corp. reached a deal with the Boise, Idaho grocer to acquire 72 convenience stores and fueling centers in four major markets.

The fueling sites are located in Texas, Colorado, Arizona and Louisiana. However, the stores are concentrated in the Dallas-Fort Worth, Denver, Baton/Rouge and Lafayette, La., and Phoenix markets. The deal is a home run for Valero as it strengthens its presence in these markets. The refiner-marketer already operates about 950 company-owned Corner Store locations.

“This transaction offers great synergies with our existing retail network and supply chain," said Gary Arthur, president of Valero’s retail division. "All of these sites are relatively new and offer strong potential for merchandise growth.”

Valero plans to reimage the Albertsons sites to its Corner Store brand and sell Valero-branded fuel. Financial terms of the deal were not disclosed. Valero officials expect to close the transaction in August 2008.

Valero has approximately 5,800 retail and wholesale stores in 44 U.S. states, Canada and the Caribbean under various brand names including Valero, Diamond Shamrock, Shamrock, Ultramar and Beacon. It has a refining capacity of 3.1 million barrels per day at its 17 refineries.

For Albertsons, the move is the latest in a series of sales and closures that began back in December 2006 when it announced it would be closing five unprofitable stores in North Texas. In January 2007, it reported a plan to shutter 11 more stores in Texas, including six in the Dallas area and two in the Austin area, along with eight stores and two warehouses in Arizona and Colorado. In September of that year, it announced plans to exit the Austin market entirely.

In June 2007, Albertsons said it was exiting the Oklahoma market, closing or selling all 26 stores in the state. That same month, the grocer’s Dallas-Fort Worth division began outsourcing its grocery distribution operations after selling off its Fort Worth distribution center to Associated Wholesale Grocers.

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