Spartan Buys Felpausch Stores
GRAND RAPIDS — Spartan Stores Inc. plans to buy the Felpausch retail grocery store chain from the privately owned G&R Felpausch Co. of Hastings for $38.5 million in cash.
Nine of the 20 Felpausch stores have in-house pharmacies, and the acquisition includes two fuel centers and three convenience stores. The stores are located in central Michigan communities where Spartan currently has no retail presence.
The company expects to close on the deal in about 90 days, Spartan spokeswoman Jeanne Norcross said. She said that between now and then, Spartan’s goal is to meet with all the employees to reassure them, to get to know the customers better, and to begin to assess what the company hopes to accomplish with its reinvestment in those stores.
“Our intention is to retain all of the store employees; they will be critical to the retention of customers,” Norcross said.
The company indicated that the acquisitions will increase its annual retail segment sales by approximately $200 million, given that Felpausch is an existing customer in its distribution channel. Spartan anticipates transition expenditures in the range of $5 million to $6 million to integrate the Felpausch stores, which Norcross said range in size from 15,000 to 50,000 square feet. The expenses are associated with merchandising, product and branding initiatives and initial employee training.
As of last Wednesday, the company had not yet decided whether the acquired stores would continue to bear the Felpausch name.
“This transaction follows our successful acquisition of D&W stores last year,” said Craig Sturken, chairman, president and CEO. Spartan acquired 16 D&W Food Center stores for $45 million in March 2006, and the D&W operations have helped boost retail store sales in every quarter since. Sturken said the Felpausch stores represent an “outstanding geographic fit” with Spartan’s current retail store footprint, and at the same time provides for Spartan’s expansion into the central Michigan market.
G&R Felpausch Co. is a regional grocery retailer with a network of retail store locations in south-central and southwestern Michigan. The stores average 40,000 square feet.
Spartan is a regional grocery distributor and grocery retailer with approximately 6,000 employees and annual revenues of more than $2 billion. When the Felpausch stores are folded in, Spartan will have 111 retail operations that include D&W Fresh Markets, Family Fare Supermarkets, Glen’s Markets, The Pharm drug stores and fuel centers.
Felpausch Chairman and CEO Mark Feldpausch said the deal brings together two of Michigan’s premier grocery store operators.
“This transaction strengthens the market position of a leading conventional grocery store operator and will ensure that customers in south and central Michigan continue to have a choice to shop at one of the best conventional retail supermarket chains in the local market,” he said.
When asked if Spartan also is considering the purchase of some of the Farmer Jack grocery store operations in southeast Michigan, Norcross responded that the company normally doesn’t address rumors and speculation.
“Our focus today is on the purchase agreement to acquire the Felpausch stores and to support our independents who are in that Farmer Jack market,” she remarked.