LARCHMONT, N.Y. -- D'Agostino Supermarkets here is going suburban in a major way.
The 23-store chain, which operates all but three of its stores in New York City, said last week it plans to acquire Kings Super Markets, Parsippany, N.J., for $160 million. All 29 Kings stores are in suburban locations -- 27 in central and northern New Jersey and two in Long Island, N.Y.
The two companies will combine for annual sales volume of approximately $750 million, with Kings doing about $500 million and D'Agostino's about $250 million.
The deal -- the first acquisition for D'Agostino's in its 70-year history -- is expected to be consummated within four to six weeks, Nicholas D'Agostino Jr., chairman and chief executive officer, told SN.
D'Agostino said Dan Portnoy, executive vice president and marketing for Kings, will become president and chief operating officer of D'Agostino's, both new titles within the company. Alan C. Levitan, who has been president and CEO of Kings since May 1998, will leave Kings once the deal is completed.
Portnoy joined Kings four years ago as senior vice president, merchandising, after serving as senior vice president, sales and marketing, for Cott Corp., Toronto. He previously worked for Jewel Cos., Melrose Park, Ill., and Food Emporium, New York, prior to its acquisition by A&P.
D'Agostino's plans to retain the Kings banner on the New Jersey stores. "We hope to make the transition seamless to the people at store level and to customers," D'Agostino said. "Ideally, the customers will say things are better and the associates will say it's more fun to work for the new organization."
D'Agostino's is acquiring Kings from Marks & Spencer, the London-based retailer that acquired the New Jersey chain in 1988 for $110 million. Marks & Spencer has been seeking a buyer for the chain since September 1999.
Gristede's, a New York-based chain, was vying with D'Agostino's to acquire Kings but was unsuccessful in putting together financing. Gristede's said last week it has "a continuing interest in Kings should the sale to D'Agostino's not be consummated."
D'Agostino said his company raised the money for the acquisition from a bank consortium headed by GE Capital Corp. and GMAC. Supervalu, the chain's Minneapolis-based wholesaler, also participated in the deal, he noted.
According to D'Agostino, post-merger developments will include the following:
Moving the headquarters of the combined company from here to Kings' offices in Parsippany, "because they have space that they're leasing, and it would be inconvenient to get out of the lease, whereas we own our building here."
Although the majority of headquarters functions will move -- probably within three to nine months -- "we will continue to have a presence here in Larchmont," he said. However, it's too early to say which functions will stay and which will relocate, he added. "We're working on the details of that now," he said.
Changing Kings' wholesale supplier from White Rose Foods, a division of DiGiorgio Corp., Carteret, N.J., to Supervalu within 60-90 days after the deal is consummated.
Retaining most of Kings' management, including Pat Dentato, chief financial officer, and Fred Brohm, vice president, operations. Fred Turrin, D'Agostino's vice president, finance, will be reassigned or will leave the company, D'Agostino said, while Peter Nero will continue as vice president, operations, for the D'Agostino stores.
D'Agostino said his company has never made an acquisition, "but the management and marketing philosophies of our two companies are so similar that this was an appealing deal. And we like the fact that our geographies are only 35 miles apart but we don't compete with each other."
Both companies operate conventional stores with upscale merchandise that is very similar, he added, "and we already share several perishables vendors."
The primary difference is store size, he said, with D'Agostino stores averaging 8,000 square feet in its 20 urban and three suburban locations and Kings averaging 20,000 square feet.
"We see opportunities to use our expertise to provide benefits to the smaller Kings stores, and we believe our larger stores will benefit from their expertise," D'Agostino said.
D'Agostino's was established in 1932 by Nick and Patsy D'Agostino. Kings was founded in 1936 by the Bildner family, which sold the chain to Marks & Spencer.