Bi-Lo's blockbuster acquisition of the Winn-Dixie grocery store chain is expected to produce lower prices and more variety for customers, Bi-Lo's chief executive said Monday.
But don't expect to see Winn-Dixie stores return to the Chattanooga area, said CEO Michael Byars in a telephone interview.
"I don't see that happening," he said.
Byars said the deal will provide Bi-Lo, the No. 1 grocer in the Chattanooga area, with about 30 stores, with more options to compete and succeed in the future.
Mauldin, S.C.-based Bi-Lo agreed to buy Winn-Dixie for $560 million, according to the companies.
The deal, expected to close by spring 2012, will create a mega-chain covering much of the Southeast with nearly 700 stores, upping its purchasing power and creating better economies of scale.
Bi-Lo is set to climb to the ninth biggest grocery chain in America and into the top five in the South, Byars said.
"That's what's so exciting about it," he said.
Winn-Dixie operated about a half dozen stores at one time in the Chattanooga area before shutting them in 2005 amid a retrenchment by the Jacksonville, Fla.-based grocer.
Industry analysts said the new deal appears to make a lot of sense.
Headquarters: Mauldin, S.C.
Stores: 207 in four states
Employees: More than 2,000 in Chattanooga area, 17,000 total
Revenues: $2.2 billion
Owner: Lone Star Funds of Dallas, Texas
Headquarters: Jacksonville, Fla.
Stores: 480 in five states
Revenues: $6.8 billion
Owner: Publicly held
Source: Companies, Google, Hoovers, Forbes
"It helps Bi-Lo compete with Walmart and Publix," said Jon Springer, associate editor of Supermarket News. "It gives them more freedom to do the things they want to do."
Winn-Dixie is heavy in Florida, Alabama, south Georgia, Mississippi and Louisiana. Bi-Lo serves South and North Carolina, Tennessee and Georgia.
Lorrie Griffith, editor of industry publication The Shelby Report, said the combined company will be a regional powerhouse.
"It sounds like a pretty good map, especially without a lot of overlap," she said.
Some Bi-Lo customers in Chattanooga on Monday were upbeat about the deal.
Karen Brown, of Signal Mountain, said she's a big Bi-Lo shopper. She said she looks forward to seeing more variety in its stores.
Ginny Johnston, of Lookout Mountain, said she loved Winn-Dixie.
"I was sorry when they left," she said.
Both Bi-Lo and Winn-Dixie had suffered from keen competition and other issues last decade and sought bankruptcy protection.
Winn-Dixie filed for bankruptcy in 2005, emerging a year later and closing hundreds of stores. Bi-Lo entered bankruptcy in 2009 and came out in 2010 as a stronger and leaner business under the private ownership of Texas-based Lone Star Funds.
Officials at Bi-Lo, half the size of publicly held Winn-Dixie, have talked about the strength of its balance sheet after coming out of bankruptcy, Griffith said.
Under the transaction's terms, Bi-Lo will pay $9.50 a share in cash, a 75 percent premium to Winn-Dixie's closing price Friday.
Springer of Supermarket News said the move creates some savings through an economies of scale.
"You wouldn't need two buying teams or real estate teams," he said, though he didn't think there would necessarily be store closures.
Byars said plans call to keep a presence both in Mauldin and Jacksonville and keep both store names.
However, he said, there are still management details to be ironed out.
"One of the areas is our executive management structure as well as our headquarters location," he said.
Bi-Lo in Chattanooga traces its roots to Red Food Stores, and the area is a key market to the company, Byars said.
"Those customers have a lot to be excited about," he said, adding the grocer will continue with its "savings without sacrifice," Fuel Perks and "price lock" initiatives. "It's almost like a marriage made in heaven."
Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...