CARTERET, N.J. - Regional independent wholesalers Di Giorgio Corp. here and Associated Wholesalers Inc., Robesonia, Pa., have agreed to merge, sources told SN last week.
Di Giorgio is the parent of White Rose Foods, which serves independent customers and cooperatives in greater New York and Philadelphia. AWI is a cooperative with independent retailer members in several Northeastern states. Each company posted around $1.2 billion in annual sales in 2005, ranking alongside one another at Nos. 63 and 64 in SN's Top 75 list published in January.
Neither company was available for comment last week, but published reports said Chris Michael, AWI's chief executive officer, said details about the deal are forthcoming.
Multiple sources, all requesting anonymity, told SN last week that the merger was completed following a transaction whereby AWI wired monies allowing Di Giorgio to retire $150 million in senior notes. Di Giorgio in a press release said it paid off those notes, due in 2007, earlier this month.
In March, the Moody's rating service lowered its ratings on Di Giorgio's debt, citing among other concerns "uncertainty related to the resolution of the company's ownership."
While the structure of the combined entities was not made clear, sources told SN the companies make a good strategic fit, with AWI able to provide certain perishable capabilities White Rose lacked, and White Rose offering its expertise in grocery, frozen and ethnic products. Both companies would presumably benefit from lower cost of goods and other potential synergies.
"Nobody has discussed anything with us about the deal yet," Peter Lavoy, chief executive officer of Foodtown, the Avenel, N.J.-based cooperative whose primary grocery and frozen foods supplier is White Rose, told SN late last week. "I think we'll know more in a few weeks."
The deal may also provide opportunity for the Foodtown banner to grow into new geographies, Joe Azzolina Sr., president and CEO, Food Circus Super Markets, Middletown, N.J., and chairman of the Foodtown co-op, told SN. "It gives us the opportunity for larger buying ability of the two groups in certain categories and it may give us an opportunity for growth of the Foodtown group in other areas," he said.
Foodtown, with 60 stores in New York, New Jersey and Pennsylvania, expects to open new stores in Florida shortly after an independent member purchased former Winn-Dixie stores there (SN, June 5).
Some observers said the deal could signal additional consolidation among independent wholesalers in the Northeast.
