Winn-Dixie has agreed to go private in a $560 million deal with Mauldin, S.C.-based Bi-Lo LLC.

The cash buyout would create the ninth largest U.S. chain, analysts said. The combined company will account for about 690 stores and more than 60,000 employees in eight states in the southeastern U.S., according to a Reuters report.

Jacksonville, Fla.-based Winn-Dixie Stores Inc. said Dec. 19 that the company entered into a merger agreement with Bi Lo Holding, LLC, a majority-owned subsidiary of Lone Star Funds.

The deal will convert existing shares of Winn-Dixie common stock — trading at less than $6 per share Dec. 16 — to a value of $9.50 per share.

Shareholders will vote on the merger, but a date of the vote had not been scheduled. Winn-Dixie said the merger and the merger agreement were approved unanimously by the company’s full board.

Dick Spezzano, president of Monrovia, Calif.-based Spezzano Consulting Inc., said Winn-Dixie went through significant downsizing when it shut down stores and distribution centers in recent years. The company said that during the 12 weeks ending Sept. 22 of last year, it shut down 29 underperforming stores.

However, Spezzano said the chain has since stabilized and new market opportunities associated with the Bi-Lo merger could build sales. Winn-Dixie officials said there will be no store closures associated with the merger. Bi-Lo emerged from bankruptcy last May, while Winn-Dixie was under bankruptcy protection in 2005 and 2006.