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Ahold Divests Tops Convenience Stores to Investment Group

ZAANDAM, The Netherlands -- Global food retailer Royal Ahold NV here said yesterday it has agreed to divest its U.S. convenience store chain, operated by Tops Markets LLC, to WFI Acquisition, Inc., a corporation formed by Nanco Enterprises, Inc. and Bruckmann, Rosser, Sherrill & Co, Inc. The terms of the transaction were not disclosed.

Ahold said the 198 convenience stores, located in western and central New York, will continue to operate under the banners of Wilson Farms and Sugarcreek. Wilson Farms has been a division of Tops Markets since 1969. The Sugarcreek convenience stores, all of which offer gasoline, were acquired by Tops in 2000.

Ahold announced its intention to divest its convenience stores in January 2004. The move is part of the company's strategic plan to restructure its portfolio in order to focus on its core food businesses.

The transaction, which is subject to the fulfillment of certain closing conditions and regulatory approvals, is expected in the second quarter of 2005.

"This is a superb move for Ahold, as the company reinvests in its food business. The Tops and Ahold businesses are coming back," said industry analyst Burt Flickinger, managing director of Strategic Resource Group in New York, in an interview with Progressive Grocer.

However, it remains to be seen what WFI Acquisition, Inc. will be able to do with the convenience stores, given its founders' history in retail investments, Flickinger noted. "Bruckmann, Rosser, Sherrill, & Co. has had some great success in the consumer products arena, but if there’s one black eye, it's on the retail side," he said, referring to the group's investment in Jitney Jungle Stores of America, Inc. in the 1990s, which ended up with the retailer going into liquidation.

"At the time, Jitney Jungle was the biggest retailer in Mississsippi, and its Delchamps Food Stores were a big force in New Orleans and the Gulf Coast region. It should have been a good deal," Flickinger said.

Additionally, although the convenience store/gasoline businesses have been lucrative for large grocery chains with existing real estate, such as Kroger, the smaller, regional convenience stores are widely expected to continue down the path of bankruptcy they've been on for the last decade, Flickinger said.

-- Jenny McTaggart
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