Roundy’s, Inc. (“Roundy’s”) (NYSE: RNDY), a leading grocer in the Midwest, today announced the company has signed a definitive agreement to acquire 11 Dominick’s stores from Safeway Inc. (“Safeway”) (NYSE: SWY) in a $36 million cash and lease assumption transaction. The stores will be converted to the Mariano’s banner, Roundy’s growth banner, in the Chicago metropolitan area. “This acquisition is transformational in terms of Mariano’s expansion plans in the Chicago metropolitan area, allowing us to open 11 additional stores in 2014 in prime locations with great market demographics,” said Robert Mariano, chairman, president and chief executive officer of Roundy’s. “These key locations will seamlessly integrate into and complement our existing base of 13 Mariano’s locations as well as our 5 additional 2014 Mariano’s locations now under construction.” The company expects to close the transaction in the second half of December, 2013. There will be a transition period of approximately one to two months during which Roundy’s will take possession of the stores and convert them to their Mariano’s banner. Roundy’s plans to fund the acquisition through a debt financing transaction, the proceeds of which will also be used to reduce the company’s debt under its first lien credit facility. The company will also amend its first lien credit agreement to increase financial flexibility by relaxing certain covenants. The financing transaction is expected to close concurrently with the closing of the acquisition. With the near doubling of the Mariano’s store base following this acquisition and the strong continued growth prospects that exist for the Mariano’s banner, Roundy’s has determined that allocating additional capital to its attractive growth opportunities is the best use of cash from a long-term shareholder return perspective. As a result, Roundy’s will suspend its quarterly dividend so that it can use that cash to grow the Mariano’s business. Credit Suisse acted as financial advisor and Kirkland & Ellis LLP served as legal advisor to Roundy’s in connection with the transaction.
Acquired Dominick’s Store Locations
- Park Ridge: 1900 S. Cumberland Ave.
- Western Springs: No. 14 Garden Market Street
- Chicago: 3145 S. Ashland Ave.
- Chicago: 2021 W. Chicago Ave.
- Northfield: 1822 Willow Rd.
- Westchester: 3020 S. Wolf Rd.
- Buffalo Grove: 450 Half Day Rd.
- Chicago: 5201 N. Sheridan Rd.
- Gurnee: 6655 Grand Ave.
- Aurora: 3025 E. New York St.
- Shorewood: 950 Brook Forest Ave.
Forward-Looking StatementsThis release contains forward-looking statements about the company’s future performance, which are based on management’s assumptions and beliefs in light of the information currently available to it. The company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the company’s principal markets; employee relationships and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the cost of capital and our ability to access capital; supply or quality control problems with vendors; and changes in economic conditions which affect the buying patterns of customers. Additional factors that could cause actual results to differ materially from such statements are discussed in the company’s periodic reports and filings with the Securities and Exchange Commission.