Dallas-based distribution giant Fleming has signed a sales agreement with Albertson's, which includes the purchase of the grocery giant's Tulsa distribution facility and a long-term supply arrangement under which Fleming will provide procurement and distribution services for Albertson's operations in Oklahoma and Nebraska.

The five-year arrangement initially includes annualized sales volume of about US$250m, and the parties expect that, subject to customary closing conditions, it will commence in July 2002.

Larry Johnston, Albertson's chairman and CEO, explained: "Our recent decision to exit several markets served by the Tulsa distribution center created an opportunity for Albertson's and Fleming to work together. This transaction allows us to both maximize shareowner value and increase supply chain efficiency."

Mark Hansen, Fleming chairman and CEO added: "Achieving a low-cost supply chain is critical in today's retail environment. We believe this arrangement between our companies will allow Albertson's to leverage Fleming's scale in the Oklahoma and Nebraska markets and deliver significant benefits for both parties.

"Fleming's ability to efficiently serve retailers of all sizes and formats is a key component of our continued growth. This arrangement supports our strategy to further diversify our customer base and makes Albertson's one of our five largest customers."

Albertson has also announced plans to close its Houston distribution facility following the recent decision to exit the Houston and San Antonio markets. The company's Dallas/Ft. Worth distribution center will support the procurement and distribution needs of the Houston and San Antonio stores until their final disposition.