UPDATED: Kroger, Publix reported as bidders for Bi-Lo - The Packer

UPDATED: Kroger, Publix reported as bidders for Bi-Lo

08/10/2010 04:42:13 PM
Bruce Blythe

(UPDATED COVERAGE, Aug. 12) Kroger Co. and Publix Super Markets are among potential bidders for Bi-Lo LLC, a U.S. grocery chain that emerged from bankruptcy in May, Reuters reported.

Bi-Lo, which has more than 207 stores in four Southeastern states, is for sale and has drawn interest from “strategic” and private equity buyers, Reuters reported, citing a source familiar with the matter that the news organization didn’t identify.

Cincinnati-based Kroger, the largest U.S. supermarket chain, and Publix, based in Lakeland, Fla., are among potential bidders and are considering buying “at least a significant number” of Bi-Lo stores, according to Reuters.

Publix spokeswoman Maria Brous denied the report, which she deemed a “rumor.” Publix operates 1,020 stores in the Southeast, mostly in Florida and Georgia.

“We have not to my knowledge put a bid in for any Bi-Lo locations or expressed any interest in any of their locations,” Brous said Aug. 10.

Kroger spokeswoman Meghan Glynn said the company does not comment on rumors and speculation.

A spokesman for Lone Star Funds, a Dallas-based private equity firm that bought Bi-Lo from Dutch supermarket group Royal Ahold for $660 million in 2005, also didn’t respond to messages.

Bi-Lo may be an appealing acquisition for a larger grocery company seeking to build a “value” channel that targets lower-income consumers in a weak economy, industry analyst Phil Lempert said.

Some traditional U.S. supermarket chains have already announced plans to expand their discount operations. For example, Supervalu Inc. in 2009 said it will double the number of stores in its Save-A-Lot discount unit over the next five years. Eden Prairie, Minn.-based Supervalu currently runs about 1,180 Save-A-Lot stores.

“Bi Lo, with the proper support and leadership, could be a huge opportunity for a larger chain to have impact and build relationship with a lower-income customer base,” Lempert said in an e-mail. “The key to success will be understanding what this customer is looking for and giving it to them in an environment that celebrates food, versus just piling high and selling cheap.”

The recession and food deflation hurt many supermarkets in recent years. In March 2009, Greenville, S.C.-based Bi-Lo filed for Chapter 11 bankruptcy, shortly before payments on some debt were due.


Under the bankruptcy agreement, Bi-Lo will receive a $200 million loan from Credit Suisse Group and $150 million in new equity investment from Lone Star Funds.



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