Spartan Pays 45M For DW

December 30, 2005
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GRAND RAPIDS — Devotees of D&W’s current house brand, Rich Foods, had better stock up, because when the $45 million purchase of the 20-store grocery chain is complete in 2006, new owner Spartan Stores Inc. will be stocking the shelves with its own private label goods.

The Byron Center-based grocer and food distributor announced last month that it will add the D&W chain to its retail collection. The D&W chain, which has been privately owned since its inception in 1961, is now owned by the family of co-founder Roy Woodrick. The Business Journal was unable to reach the Woodrick family for comment.

Since the two companies announced the buyout at a Dec. 19 press conference, there have been few details about how a Spartan-owned D&W will differ from the experience shoppers are accustomed to (other than the aforementioned private label switch). But some stores may close, and administrative employees may lose their jobs.

“As we go through the due diligence process, we will evaluate each location to determine what its future is,” said Craig Sturken, president, chairman and CEO of Spartan. Considering the closure of any store would “certainly be part of (Spartan’s) due diligence process,” he said.

By purchasing D&W, Spartan gains access to several new markets. Sturken expressed his pleasure at Spartan’s new opportunities in the proximity of East Grand Rapids, where two D&W stores are located, in BretonVillage and GaslightVillage. He admitted that among East Grand Rapids shoppers, D&W has held a “tremendous competitive advantage” over Spartan’s other local chain, Family Fare. He also expressed the company’s eagerness to enter the Kalamazoo and Grand Haven markets, where D&W has established stores.

Spartan does not plan to change the D&W name. As Sturken and D&W CEO Doug Blease mentioned several times during a recent press conference, Spartan’s purchase of D&W is much more likely to affect Spartan shareholders than D&W shoppers.

The purchase does pose some public relations challenges for Spartan. Incorporating D&W’s 2,200 employees into Spartan’s team of 6,500 may mean administrative layoffs. Both Blease and Sturken recognized the potential for job losses. Blease said that he had “a real good conversation” with the D&W team, addressing some of the concerns inherent in a corporate takeover. Both CEOs emphasized that personnel decisions will be made once Spartan moves further along in its due diligence. Spartan has indicated that it may absorb many of D&W’s administrative employees.

“I don’t think this will be as tragic as one might expect,” said Sturken.

Both CEOs offered positive comments on the merger, which Sturken admitted has been in the works to some extent since his arrival in Grand Rapids in 2003.

“This is good news for our community, for our customers and for our associates,” Blease said. “While it is far too early for us to say what the fully integrated company will look like, we can say with great certainty that it will reflect the needs and preferences of our customers.”

It will also reflect a $200 million boost to Spartan’s $2 billion in annual sales. That figure represents a 22 percent increase in Spartan’s retail business. Although there was a temporary price spike after Spartan filed details of the purchase with the Securities and Exchange Commission, the news of the D&W purchase has had relatively little impact on the company’s stock. Ten days after the companies announced the purchase, the share price had settled back to its previous level around $10.75.    

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