Albertson's said it would not change the name of the 177-store Acme chain, which has operated in Philadelphia for more than 100 years and is known locally as ``The Ack-a-me.''
``They understand the value of that name and all that it means in the culture, and I don't think they will make any significant changes,'' said Dan Zvonek, a spokesman for American Stores, which is based in Salt Lake City.
Under the agreement, Albertson's would acquire Acme, along with American Stores' other operations: Lucky Stores, Jewel food stores, and Osco and Sav-on Drugs. American Stores has 1,558 stores in 26 states.
Albertson's, although smaller than American Stores with 916 stores and $14.1 billion in sales, has consistently been more profitable and is viewed by analysts as the stronger operator.
``Overall it should be a good deal. The combined company will be stronger and more competitive,'' said Brian Eisenbarth, an analyst with Collins & Co. in San Francisco, who follows both companies.
Acme is the Philadelphia region's largest food seller with $1.96 billion in sales and a 28 percent share of the total food market, according to Food Trade News, a local supermarket trade publication.
However, in the 1990s it has lost market share to nontraditional food retailers, such as Wal-Mart, and supermarket chains operating larger stores in affluent suburban locations, including Genuardi's and Super G.
Still, Acme's market dominance is among the strongest in the nation, and in the last year it has held the line on its eroding market share by building larger stores and expanding existing ones.
``I think the changes might be less drastic than you might expect,'' said David Callahan, editorial director of Food Trade News. ``I imagine for the first few years Albertson's will allow Acme to not change much.''
In the future, he said, supermarket operators will be forced to close stores in the Philadelphia area where grocery chains, buoyed by a strong economy and low interest rates, have built more stores than can remain profitable in the low-margin business.
``When the business cycle goes the other way, it's not going to be sustainable and some stores are going to close,'' he said.
Albertson's is known as a low-cost, no-frills marketer, operating in the lower-cost and growing regions of the South, West and Midwest.
This acquisition would bring it into the heavily union environments of Philadelphia and Chicago, where Jewel is based.
Albertson's is the target of a class action lawsuit filed by employees who allege the chain forced them to work overtime without additional pay in violation of federal labor law. More than 7,000 complaints have been submitted to United Food and Commercial Workers lawyers who filed the case, said Joe Peterson, a spokesman for the union.
A hearing on the case is scheduled for October in Seattle.
About 35 percent of Albertson's stores are unionized, Peterson said.
``Our union has never had a worse relationship than that with Albertson's,'' Peterson said.
Seventy-four percent of American Stores' 121,000 employees are represented by a union.
A combined company would operate about 2,470 stores in 37 states, with 1998 estimated sales of about $36 billion and more than 218,000 employees, according to an Albertson's statement.
Under the merger agreement, American Stores' shareholders would take on 41 percent of the combined company in a stock swap. Albertson's said it would take on an additional $3.4 billion in debt as part of the $8.3 billion acquisition, which it expects to complete early next year.
American Stores chairman and chief executive Victor L. Lund would become vice chairman of the company, while Albertson's chairman and chief executive Gary G. Michael would continue as chairman and chief executive.
Albertson's said the merger would save an estimated $300 million a year within two years. It said $100 million in savings would come from having greater clout with vendors because of its larger size. The remaining $200 million would come from cuts in duplicate administrative functions and information systems, reduced advertising in overlapping markets, and additional streamlining.
Albertson's said it will take a ``significant'' charge to pull the two organizations together, but said it does not yet know how much that will be.
In 1991, American Stores tried to sell Acme Markets, but took the stores off the market, deeming a bid of $1 billion for 270 stores too small.
Albertson's and the company that became American Stores joined forces previously.
From 1969 to 1977, they operated a partnership that developed grocery stores with in-house pharmacies.
At that time, the company was operated by Sam Skaggs. He acquired American Stores in 1979, and kept the corporate name. In 1984, he acquired Jewel and in 1988 added Lucky to the chain.
Skaggs retired in 1995 and sold his 18.3 percent stake last year.
In March, Royal Ahold NV, the Dutch parent of Giant Food Stores Inc. of Carlisle, Pa., said it would buy Giant Food Inc. of Landover, Md., the parent company of Super G, for $2.7 billion. The combined company would have $563.6 million in sales and become the region's sixth-largest food chain. The merger is awaiting shareholder and regulatory approval.
Late last week, just days before Albertson's made its bid, American Stores options trading surged, Bloomberg News reported.
Trading Thursday and Friday in American Stores call options, which investors use to bet that share prices will rise, was 44 times that of put options, a gamble that shares will drop. A total of 2,114 call-option contracts were traded, compared with only 48 put-option contracts. Trading volume was the most since July options contracts expired July 16.
Owners of the most active contracts could have reaped a gain of almost 400 percent in one day.
``Somebody knew something,'' said Larry McMillan, who runs McMillan Analysis Corp., a New Jersey firm that tracks options trading.
Options for American Stores trade on the Chicago Board Options Exchange. Exchange officials couldn't be reached for comment. The U.S. Securities and Exchange Commission declined to comment.
American Stores officials also declined to comment.
American Stores shares rose $5.313 to $28.50 yesterday as the most active issue on the New York Stock Exchange. Albertson's shares rose 50 cents to $48.50.