UPDATE: Dec. 16, 2021: Raley's said Wednesday that it completed its acquisition of Arizona-based Bashas' earlier this week, closing out the deal that it announced back in October. To manage the combined companies, the grocer has established a new entity called The Raley's Companies that will oversee the Raley's and Bashas' operating divisions.

Keith Knopf leads The Raley's Companies as president and CEO while Edward "Trey" Basha is president of Bashas'. The Raley's operating division will name a president next month, according to a press release Wednesday.

As part of the announcement, Raley's said it will give all eligible retail and distribution employees across its divisions a wage increase in early 2022.

Dive Brief:

• Raley's has signed a definitive agreement to acquire Bashas’ Family of Stores, according to a news release Friday. Financial terms of the deal were not disclosed.
• Bashas’ will continue to operate its existing banners under the Raley's enterprise and will maintain its corporate headquarters, more than 100 stores and distribution center in Arizona. The companies expect the transaction to close by the end of this year.
• The combined companies under Raley's will operate more than 200 stores across Northern California, Arizona, New Mexico and parts of Nevada.

Dive Insight:

By acquiring Bashas', Raley's is nearly doubling its store footprint and taking control of one of Arizona’s leading grocers as it looks to achieve greater economies of scale.

Friday’s announcement noted Raley's won’t close any Bashas’ stores and that employees will retain their current roles, compensation and benefits. It also noted Raley's will not make changes to local store leadership but did not outline plans for the chain’s executive roles — leaving the door open for the California-based grocer to make adjustments at the top.

In a video presentation broadcast to Bashas’ workers on Friday, Edward “Trey” Basha, president and CEO of Bashas’, along with Keith Knopf, president and CEO of Raley's Holding Company, shared news of the acquisition and assured them local operations will remain unchanged. 

“In Raley’s we will have a partner who will ensure we continue delivering exceptional customer and member experiences at a time when regional grocery competition has never been tougher — while staying true to the values that have shaped our history over 90 years,” Basha said in the announcement.

Knopf, meanwhile, noted in a statement that the “robust digital capabilities and combined purchasing power” will benefit shoppers across both companies.

Small and regional grocery chains are struggling to compete with scale advantages large chains enjoy in pricing, digital services and other areas. But the cash infusion provided by the pandemic offers an opportunity for regional retailers to acquire other operators. In February, Tops Markets and Price Chopper/Market 32 agreed to merge and create a combined chain operating nearly 300 stores across six Northeastern states.

In recent years, Raley's has pushed to differentiate its stores with a greater emphasis on health, specialty products and in-store experiences. In Arizona, Bashas’ competes with Kroger-owned Fry’s as well as surging specialty chain Sprouts Farmers Markets along with discount retailers Aldi and Walmart.

Bashas’ operates more than 100 stores, including banners Food City, AJ’s Fine Foods and Eddie’s Country Store, as well as the Bashas’ Diné supermarket that serves Native American communities. Raley's operates 124 store, mostly in Northern California, across four different banners: Raley's, Nob Hill Foods, Bel Air and Raley's O-N-E Market.