TLC Part Of National Strategy

February 4, 2005
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ZEELAND — Supervalu Inc. recently announced buying Zeeland-based TLC as a way of furthering its corporate strategy to become a major player in the third-party logistics business nationwide.

According to Bob Koerner, TLC's chief executive officer, the acquisition will not change TLC's operations in Zeeland — except for the new business opportunities that should result from becoming part of a larger corporation.

"It gives us the best of what we have and the ability to grow from there," Koerner said.

"It gives us opportunity to achieve size and scope that we had not had previously," added Koerner, who will serve as president of Supervalu's new third-party logistics division that was created under the acquisition.

"They're saying we have this strong experience in the business and there's something they can do to leverage that," Koerner said.

Supervalu Inc. announced the $233 million deal on Jan. 11 to acquire Milwaukee-based Total Logistics Inc., the parent company of TLC and Zero Zone, a North Prairie, Wis., maker of refrigerated and freezer display cases for grocery stores.

The acquisition, consisting of cash and debt assumption, cleared federal regulatory review on Jan. 25.

TLC accounts for about 75 percent of Total Logistics' annual revenues and operates a network of 30 logistics centers with a combined 57.2 million square feet of refrigerated capacity and 3.2 million square feet of dry storage space.

It also operates a fleet of 435 tractors and 826 dry and refrigerated trailers.

Total Logistics Inc. reported sales of $276.4 million in 2003, the most recent full year for which data is available, and net income of $4.2 million.

According to Jeff Noddle, Supervalu's chairman and CEO, acquiring Total Logistics Inc. gives Supervalu a "full suite" of logistics services to offer clients and "a significant position" within the third-party logistics industry.

Total Logistics Inc. has a strong management team, an "enviable" client roster, a broad array of services and a strong track record for innovation and growth, Noddle added.

"This company, in our view, provides the platform for Supervalu to take center stage in the growing market for third-party logistics services," he said in a January conference call to discuss the acquisition with brokerage analysts.

"This creates tremendous opportunity for both companies."

Supervalu supplies 2,500 grocery stores in 48 states with brand name and private label products and operates 1,400 stores of its own in 40 states, including Save-A-Lot discount grocery stores.

The company recorded sales of $20.2 billion in its most recent fiscal year that ended last February and net income of $280.1 million.

Through the first nine months of its 2005 fiscal year, Supervalu had revenues of $15.0 billion and net income of $292.2 million, the company reported last month.

According to Noddle, Supervalu was looking for a logistics company to acquire.

In TLC, he said, it found a company that is highly respected within the industry and a good match with the corporate strategy, Noddle said.

"The more we learned, the more we liked the company," he said.

TLC has experienced strong growth in recent years, averaging annual sales increases of more than 20 percent, Koerner said.

The company employs about 2,800 people nationwide, with more than 400 of them in West Michigan.    

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