Spartan Stores, Inc. today announced that it has entered into a purchase agreement to acquire 20 retail grocery stores, two fuel centers and three convenience stores, from G&R Felpausch Company, a privately held Hastings, Michigan-based retail grocery operator and current distribution customer.
The retail stores include the operations of nine in-store pharmacies. Completion of the transaction is subject to certain conditions including, among others, satisfactory conclusion of the Company's due diligence process.
Spartan Stores said the transaction will increase annual retail segment sales by about $200 million on completion. It expects annual consolidated sales to rise by about $100 million.
Grand Rapids, Michigan-based Spartan Stores expects the deal, which will expand its retail supermarket store base 29 percent to 88 Stores, to close late in the first quarter of 2008.
The Company expects the deal to add to net earnings during the second year of operation, as the first year gains will be more than offset by transition expenditures of about $5 million to $6 million.
The acquisition is expected to be accretive to net earnings during the second year of operation. The first year expenditures, in addition to planned capital expenditures, are expected to improve sales volumes at the acquired stores and to strengthen Spartan's retail market position in western and central Michigan.
"We are very pleased to bring Felpausch, another well-respected retail grocery operator, into our family. Sustained profitable growth through prudent retail acquisitions is a component of our ongoing and core business strategy. This transaction follows our successful acquisition of D&W stores last year. The Felpausch stores serve many communities where we currently have no retail presence," Spartan Stores Chief Executive Craig Sturken said.
"We are very excited to be a partner in this transaction, bringing two premier Michigan grocery store operators together. This transaction will ensure that customers in south and central Michigan continue to have a choice to shop at one of the best conventional retail supermarket chains in the local market," Mark Feldpausch, Chairman and Chief Executive Officer of Felpausch Food Centers said.