ST. LOUIS -- Save-A-Lot here, a division of Supervalu, intends to acquire all 30 Texas T Discount Grocery stores owned and operated by Shop N' Sav, Grand Prairie, Texas, for an undisclosed amount.
The proposed acquisition, announced last week, would enable Minneapolis-based Supervalu to accelerate its Southwest retail expansion, according to company executives.
If completed, the deal also would mark Supervalu's second significant acquisition in the past three months. Late last year, Supervalu agreed to acquire Sweet Life Foods, a wholesaler based in Suffield, Conn. (See related story, Page 6.)
Executives of Supervalu, the nation's third-largest food distribution company, have said recently Supervalu will lead the ongoing industry consolidation, both at the wholesale and retail levels.
In its proposed acquisition of the Texas T stores, Supervalu is adding to its already growing retail operations, which account for more than $3 billion in annual sales. Both Save-A-Lot and Texas T operate limited-assortment grocery
stores of 10,000 square feet to 15,000 square feet.
The Texas T stores -- located within 200 miles of the Dallas-Fort Worth metroplex in northeast Texas -- have annual sales volume of $60 million to $70 million, according to a Shop N' Sav spokesman.
The proposed Texas T deal, which is expected to be completed by midspring, encompasses all of Shop N' Sav's operations. In addition to the 30 stores, the acquistion would include two distribution centers -- a 150,000-
square-foot dry grocery facility in Grand Prairie and a 25,000-square-foot perishables warehouse in Dallas.
Shop N' Sav of Grand Prairie has operated limited-assortment stores under the Texas T name since its founding in 1984.
The company opted to sell its stores, a spokesman said, "because it seemed to be in the best interests of the two companies to combine and grow stores with similar formats in this part of the The Texas T stores will be converted to the Save-A-Lot banner after certain capital improvements are made, and will be operated as corporate stores, Bill Moran, Save-A-Lot's founder and president, said.
"Save-A-Lot has recently been expanding both its corporate and independent operations in Oklahoma, Arkansas and Louisiana," he said. "This proposed acquisition will enable us to accelerate our growth in this general market."
Save-A-Lot intends "to significantly increase" both its corporate store and franchisee presence in the Southwest, Moran said. A single franchised unit in Marshall, Texas, is the only Save-A-Lot in the state at this time.
The Save-A-Lot name is licensed to more than 330 independently owned stores, which Supervalu supplies. Supervalu also owns and operates 75 corporate Save-A-Lot units.
Supervalu added Save-A-Lot to its retail roster with its 1992 acquisition of Wetterau, Hazelwood, Mo. The units operate in 13 states.
Supervalu does not disclose Save-A-Lot's volume, but industry sources estimate it at nearly $500 million annually. This breaks down as $225 million in retail sales at the 75 corporate-owned stores and $250 million in wholesale volume for the franchisee operators.
Gary Giblen, a securities analyst with PaineWebber, New York, said the Save-A-Lot format has been successful "because it's a good way to recycle real estate and because it provides a low-price alternative in rural areas, where people don't have exposure to many low-cost stores."
