BI-LO to Acquire Winn-Dixie
BI-LO on Monday said it agreed to acquire Winn-Dixie Stores in a deal valued at $560 million, establishing the ninth largest U.S. supermarket. The combined company will have about 690 stores and 63,000 workers in eight states in the southern U.S. Winn-Dixie will become a privately-held subsidiary of BI-LO.
BI-LO, based in Greenville, SC, agreed to pay $9.50 per share in cash, a 75 percent premium to Winn-Dixie’s Friday closing stock price.
In an interview with Bloomberg News, BI-LO Chairman Randall Onstead said his company approached Winn-Dixie earlier this year, seeking to boost sales and better compete with larger rivals such as Wal-Mart and Delhaize Group’s Food Lion. Winn-Dixie, based in Jacksonville, FL, provided “absolutely the best geographic fit for us,” Mr. Onstead said. “There will be real dollar savings as we look for efficiencies in putting these companies together.”
The deal extends BI-LO’s reach to five additional states: Florida, Alabama, Louisiana, Georgia and Mississippi. BI-LO’s 207 supermarkets are in North Carolina, South Carolina, Georgia and Tennessee. BI-LO plans to incorporate Winn-Dixie’s efforts to stock its supermarkets with a variety of ethnic and local foods for its base of diverse customers, Mr. Onstead told Bloomberg.
Following completion of the merger, the BI-LO and Winn-Dixie banners are expected to remain. No closures are expected since the stores have no overlap. The new management team will be decided once the deal is closer to being finalized. The transaction is expected to close within the next 60 to 120 days, pending shareholder and antitrust approval.
Both grocers filed for bankruptcy protection in recent years. BI-LO filed in March 2009 and emerged in May 2010. Winn-Dixie filed for bankruptcy protection in 2005 and came out in 2006.
Mr. Onstead declined to comment to Reuters on rumors that Bi-Lo had put itself up for sale before seeking to buy Winn-Dixie.
“We are focused on the combination with Winn-Dixie. Both companies have faced headwinds in their past but both are now doing much better and are strong regional brands,” Mr. Onstead told Reuters.
- BI-LO and Winn-Dixie Agree to Merge – BusinessWire
- Bi-Lo to Buy Winn-Dixie for $560 Million – Bloomberg
- Winn-Dixie to go private in $560 mln deal – Reuters
Discussion questions: What do you think of a BI-LO/Winn-Dixie merger? In what ways may it help each banner’s competitive position? What lessons can be learned from past regional grocer combinations?