Group to Buy Grand Union Markets for $1.2 Billion
Grand Union Co., a privately owned Northeast-based supermarket chain, will be acquired by a partnership of investment banks in a deal worth $1.2 billion, the buyers announced.
The acquisition would mark the latest big supermarket takeover by Wall Street firms, which are attracted to the business because it is considered largely recession-proof and generates large quantities of cash.
Over the past few years, for example, the investment firm Kohlberg Kravis Roberts & Co. acquired Safeway Stores Inc. for $4.2 billion and Stop & Shop Cos. for $1.2 billion. Merrill Lynch Capital Markets acquired Supermarkets General Corp. for $1.8 billion.
Under the Grand Union agreement announced Monday, a company formed by Miller Tabak Hirsch & Co. and Salomon Brothers Inc. will buy all of Grand Union’s stock for cash. The total value of the transaction, including debt and preferred stock, is about $1.2 billion, the investment firms said in a statement.
Salomon Bros. will provide financing for the deal, which must be reviewed by the government under federal anti-monopoly laws.
Penn Traffic Co., an affiliate of Miller Tabak, which is a New York-based brokerage and merchant bank, and the management of Grand Union also will have an equity stake in the new company formed by the merger, the statement said.
Gary D. Hirsch, a principal of Miller Tabak, will be chairman of the company. Hirsch also is chairman of Penn Traffic, a supermarket chain operating mainly in New York, Pennsylvania and Ohio with annual sales of $3 billion.
Floyd Hall, GU’s current chairman and chief executive officer, has elected to retire once the sale of the company is completed.
Grand Union Co. has been in the food retailing business for more than 116 years, with annual sales of about $2.7 billion. It owns and operates 308 supermarkets in seven Northeastern states and Georgia under the Grand Union and Big Star trade names.
Hirsch said Grand Union Co. has an excellent management team, which is expected to pursue expansion plans.
