Spartan Stores, Inc. Enters Into Purchase Agreement To Acquire 17 Supermarkets And 15 Pharmacies From VG's Food And Pharmacy
GRAND RAPIDS, Mich.--(BUSINESS WIRE)--Spartan Stores, Inc., (Nasdaq: SPTN) today announced that it has entered into a purchase agreement to acquire 17 retail grocery stores, including 15 pharmacies, from VG's Food Center, Inc. and VG's Pharmacy, Inc. a privately held Fenton, Michigan-based retail grocery operator and currently the Company's largest distrib ution customer. Completion of the transaction is subject to certain customary closing activities including, among others, satisfactory conclusion of the Company's due diligence process.
The Company expects the transaction to close near the end of its fiscal 2009 third quarter. Upon completion, the transaction is expected to increase annual retail segment sales by approximately $310 million, with annual consolidated sales increasing approximately $160 million, as VG's is an existing distribution customer. During the first year of ownership, the Company expects this acquisition to have a neutral affect on earnings per share as initial realized operational synergies from the transaction will be more than offset by transition expenditures. These transitional expenses include marketing and promotional activities related to merchandising, product and branding initiatives, as well as initial employee training and other costs associated with integrating the acquired operations. The acquisition is expected to be accretive to net earnings during the second year of operation.
Commenting on the transaction, Spartan Stores' Chairman of the Board Craig C. Sturken said, "We are very enthused to bring VG's, a premier Michigan retail grocery operator, further into the Spartan Stores' family. Achieving profitable growth through a combination of organic growth and prudent retail acquisitions is the essence of our business strategy. This transaction follows our successful acquisitions of D&W Food Centers and Felpausch Food Centers. The VG's stores serve communities in key Michigan markets where we have no retail presence. The Van Gilder family has been one of our best and most loyal distribution customers for nearly 50 years, and we are very proud of our long-standing relationship with them.
"We are committed to upholding the outstanding shopping experience that VG's has nurtured with customers in its markets for decades. Our marketing, merchandising, and category management expertise joined with VG's profound understanding of the local markets provides excellent opportunities to enhance the customers' shopping experience, produce operational synergies and raise shareholder value."
Ms. Lisa Van Gilder, President and Chief Executive Officer of VG's said, "We are very pleased to be partnering with Spartan Stores. They are recognized among the best retail grocery operators in the industry and have demonstrated their ability to succeed in a very challenging environment. We have great confidence in Spartan Stores and their ability to provide excellent service and value to our customers, and the continuity in our corporate cultures will be beneficial to our associates."
The Food Partners (www.thefoodpartners.com), a national investment banking firm providing merger, acquisition and divestiture services to the supermarket industry, advised Spartan Stores on its acquisition of VG's.
About Spartan Stores
Grand Rapids, Michigan-based Spartan Stores, Inc., (Nasdaq:SPTN) is the nation's tenth largest grocery distributor with warehouse facilities in Grand Rapids and Plymouth, Michigan. The Company distributes more than 40,000 private-label and national brand products to nearly 400 independent grocery stores in Michigan, Indiana and Ohio. Spartan Stores also owns and operates 84 retail supermarkets in Michigan, including Family Fare Supermarkets, Glen's Markets, D&W Fresh Markets, and Felpausch Food Centers.
Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements are identifiable by words or phrases indicating that Spartan Stores or its management "anticipates", "believes", "expects", "looks forward", "plans" that a particular occurrence "will" be the result or occur; that an "opportunity" will be realized, or similarly stated expectations. These forward-looking statements are subject to a number of factors that could cause actual results to differ materially. The Company's ability to complete the proposed acquisition depends on satisfaction of a variety of contractual conditions, not all of which are entirely within the control of the Company or VG's Food Center, Inc. and VG's Pharmacy, Inc. Realization of increased sales and earnings depends on the Company's ability to successfully complete the transaction, integrate the acquired assets, and implement its plans and business practices. The Company's ultimate ability to execute its strategies, compete effectively, and achieve long-term success is subject to a variety of uncertainties and factors. Additional information about the factors that may adversely affect these forward-looking statements are contained in Spartan Stores' reports and filings with the Securities and Exchange Commission. Spartan Stores undertakes no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this press release.
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