MECHANICSVILLE, Va. -- The proposed acquisition of West Point, Pa.-based Rotelle Inc. by Richfood Holdings here should -- if successful -- result in increased frozen food buying power for both Richfood and the stores it services, according to a Richfood official.
"Between the two of us, we'll be able to buy better," said John E. Stokely, Richfood's vice president of finance and administration. "To the extent that we do buy better, it's always been our philosophy to pass that on to our customers. We believe if we can land product in the stores properly, that makes them stronger and, in turn, makes us stronger. From that standpoint, there'll be some advantages for our customers."
Richfood has signed an agreement to acquire the outstanding common stock of Rotelle, a wholesale frozen food distributor, for $52.8 million. The acquisition, which is expected to close by Sept. 16, would add more than 25% to Richfood's annual sales volume of $1.3 billion.
Stokely said there's a "significant" amount of synergy between the two companies in distribution and logistics, which would help reduce costs further.
That synergy could also result in increased product offerings, mostly in dry grocery, to retailers currently supplied by Rotelle.
"It creates some opportunities for stores like Acme [Malvern, Pa.] and Richfood in some other lines of business, where we can supplement some of the things they're doing themselves." The most logical area of growth in product offerings in frozen food, he said, is private label. "I can see them expanding somewhat, but only where it's appropriate," he said.
Rotelle has 6.3 million cubic feet of cold storage freezer space and 185,000 square feet of warehouse, offices and truck maintenance facilities. The company sells a full line of frozen food, ice cream and frozen bakery products. It also operates a food service division, manufactures ice and operates a meatcutting facility.
Its supermarket industry customers include Acme; Genuardi Super Markets, Norristown, Pa.; Clemens Markets, Kulpsville, Pa., and some independents supplied by Fleming Cos., Oklahoma City.
John F. Rotelle, president of Rotelle, and Alfred F. Rotelle, president of the company's food service division, would remain in their current positions. Rotelle would operate as an independent subsidiary of Richfood Holdings.