Piggly Wiggly Carolina Co. Sells 28 Stores in Hybrid Deal

Another signficant development that will further alter the pressure-cooker Southeastern U.S. supermarket scene has been revealed with Charleston, S.C.-based Piggly Wiggly Carolina Co.'s hybrid deal to sell 28 corporate stores to two different retailers, 22 of which will be sold to Bi-Lo Holdings LLC – parent company of Bi-Lo and Winn-Dixie – and another six stores and one location under construction to Harris Teeter Supermarkets, Inc.

Both transactions are expected to close in the fourth quarter of 2013, at which time Piggly Wiggly will have 33 remaining corporate stores and 28 independently owned locations under its umbrella.

The 22 stores set to be acquired by Bi-Lo employ roughly 1,200 employees in South Carolina and coastal Georgia and will be rebranded under the Bi-Lo banner name.

"The departure of employees and stores from the Piggly Wiggly team will be acutely felt, but we know that Bi-Lo Holdings and Harris Teeter will benefit from these outstanding folks," David Schools, president and CEO of Piggly Wiggly Carolina, said in a statement. "We are glad that employees in these stores will have the opportunity to work for Bi-Lo Holdings or Harris Teeter, and guests will continue to be served by the familiar people who have been the backbone of these stores for years.”

The Piggly Wiggly stores that Bi-Lo Holdings will acquire include 16 in South Carolina and six in Georgia:

• 3386 Railroad Avenue, Bamberg, S.C.
• 50 Burnt Church Road, Bluffton, S.C.
• 445 Meeting Street, Charleston, S.C.
• 630 Skylark Drive, Charleston, S.C.
• 136 South Main Street, Clover, S.C.
• 4711-1 Forest Drive, Columbia, S.C.
• 104 Jungle Road, Edisto Beach, S.C.
• 3353 Highway 72/221 East, Greenwood, S.C.
• 3575 Maybank Highway, Johns Island, S.C.
• 9616 Highway 78, Ladson, S.C.
• 760 Highway 378, Lexington, S.C.
• 4360 Augusta Road, Lexington, S.C.
• 208 East McIntyre Street, Mullins, S.C.
• 115 Willbrook Boulevard, Pawleys Island, S.C.
• 518 North Wheeler Avenue, Prosperity, S.C.
• 615 Harry C Raysor Drive South, St Matthews, S.C.
• 1338 North Way, Darien, Ga.
• 4415 Augusta Street, Garden City, Ga.
• 312 South Main Street, Glennville, Ga.
• 1042 US Highway 80 West, Pooler, Ga.
• 2142 East Victory Drive, Savannah, Ga.
• 7360 Skidaway Road, Savannah, Ga.

"We look forward to welcoming these new associates to the Bi-Lo Holdings family and to building on the strength of these stores," said Randall Onstead, president and CEO of Jacksonville, Fla.-based Bi-Lo Holdings. "We will continue to fine-tune our company and network of stores so that we can reinvest in what matters most for our customers... the freshest foods, the best deals and really connecting to their neighborhoods."

The Piggly Wiggly stores that Harris Teeter will acquire, meanwhile, include three stores in Charleston, S.C. located at 1739 Maybank Highway, 1985 Folly Road and 1005 Harbor View Road; two stores in Mount Pleasant, S.C. located at 1220 Ben Sawyer Boulevard and 1981 Riviera Drive; the Newton Farms location on Kiawah Island, S.C.; and one store location under construction in Isle of Palms, S.C. located at 1513 Palm Boulevard.

“Piggly Wiggly has a long tradition of operating customer-friendly stores in Charleston,” said Thomas W. Dickson, Harris Teeter Supermarkets’ board chairman and CEO. “These store locations and the dedicated associates who work in them make this an especially attractive transaction for Harris Teeter. We plan to remodel and expand a number of these locations to create brand new Harris Teeter stores to serve our customers. Charleston is a growing and vibrant market, and we look forward to continuing to expand our presence in the region."

Harris Teeter plans to close the acquired stores for three to four days for stocking and training of employees, although the stores in-store pharmacies at the acquired stores will remain open throughout the transition.

Mark Gross, president of Keene, N.H.-based Surry Investment Advisors LLC, which acted as financial advisor to Piggly Wiggly Carolina Co., said the pending deals underscore two broad themes. First, as an employee-owned company, “Piggly Wiggly Carolina Co. has long focused on doing what’s in the best interest of employees on a long-term basis.” In the way the deals are structured with Bi-Lo and Harris Teeter, “Both companies agreed to welcome the Piggly Wiggly associates into their families of employees, which should in turn give them a very good future with growing companies.”

Further, for the Piggly Wiggly associates who remain with the company, they will have a more financially secure future, added Gross, while its independent operators will derive benefits with a “solid service organization standing behind them. As a company deeply committed to its employees and its local neighborhood markets, Piggly Wiggly has put both of these at forefront of its decision-making.”

The second theme depicted by the deal, according to Gross, is the rampant “increase in acquisition activity in the food industry, and if it makes sense for Harris Teeter to combine with Kroger for greater resources, it stands to reason that the market shifts will make it increasingly difficult for a small ESOP like Piggly Wiggly Carolina to aggressively compete in the increasingly competitive Southeast market.”

Jeremy Diamond, director of the Baltimore, Md.-based Diamond Group, concurs. “The Southeast Region is gearing up for Kroger to complete its acquisition of Harris Teeter. Other big factors are the expansion of Publix and The Fresh Market. C&S, which is affiliated with Piggly Wiggly, is losing its battle – and money – for the bankrupt Belle Foods chain,” said Diamond.

“The extremely competitive retail scene down south and the unpaid debt to C&S were both key factors,” Diamond continued, noting that existing southeastern U.S. retail competitors are fearful of the shakeout after The Kroger Co.’s acquisition of Harris Teeter is complete, given its operational strengths and substantial buying power.

Honored in 2012 as Progressive Grocer's Independent Retailer of the Year, and founded in Charleston in 1947, Piggly Wiggly Carolina Co. has more than 3,000 employee-owners across South Carolina and coastal Georgia.

As the ninth-largest conventional supermarket chain in the United States based on net sales, Bi-Lo Holdings employs nearly 60,000 associates who serve customers in 686 grocery stores and 482 in-store pharmacies throughout the eight southeastern states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.