Raley’s moves into Arizona in the largest acquisition in West Sacramento grocer’s history

Raley’s is making its largest acquisition in its 86-year history, purchasing a major grocery chain in Arizona that will nearly double the number of stores under Raley’s ownership.

The West Sacramento-based supermarket chain announced last week it’s buying Bashas’ Family of Stores of Chandler, Arizona, for an undisclosed price.

The deal, set to wrap up at the end of the year, will wed two regional supermarket giants and “brings the scale we need in the supermarket business,” said Raley’s spokeswoman Chelsea Minor.

Raley’s, with $3.98 billion in sales last year, is the 61st largest grocer; Bashas’ is No. 78 with $2.38 billion in sales, according to Progressive Grocer magazine.

The deal dwarfs earlier Raley’s acquisitions, such as its 1997 deal to buy the 27-store Nob Hill chain in the Bay Area.

Bashas’ owns more than 100 stores, while Raley’s owns 124. Minor said the deal is the largest for the company, which started with Thomas P. Raley’s Placerville market in 1935.

Not every Raley’s acquisition has panned out. In 1999, the company bought 27 stores in New Mexico and the Las Vegas area from Albertsons. Within eight years, the company had sold them off. Raley’s said the stores were profitable but it needed to defend its core markets in Northern California and Northern Nevada against the likes of Walmart, the nation’s largest grocer, and others.

Industry analysts said Raley’s could never gain a major foothold in New Mexico and Las Vegas, and held such a small market share that it wasn’t worth it for the privately-held firm.

Not only does Bashas’ provide Raley’s with a major footprint in Arizona, the company is approaching the Bashas’ purchase differently.

Instead of slapping the Raley’s brand on the stores — a strategy it employed in New Mexico and Las Vegas — it will stick with the Bashas’ brand, which will operate as a subsidiary. In announcing the deal on Friday, Edward “Trey” Basha, who leads Bashas’, and Raley’s President and CEO Keith Knopf said operations in Arizona would continue without change.

“They have a strong company, they have a strong brand in their market,” Minor said. “The loyalty exists to Bashas’.”

Bashas’ operates under four different brand names. Raley’s also has four brands: Raley’s, Bel Air, Nob Hill and Raley’s O-N-E.