Cardenas, Northgate Gonzalez Buying Pro’s

Well-known Southern California-based Hispanic retailers Cardenas Markets and Northgate Gonzalez Market have come to an agreement with the U.S. Bankruptcy Court to purchase Pro’s Ranch Markets, a Phoenix-based grocery chain consisting of seven stores in Arizona, two in New Mexico and two in Texas.

The two retailers recently formed a separate LLC, Cardenas Northgate Group Ranch (CNG Ranch LLC), to acquire and operate Pro’s, which filed for Chapter 11 bankruptcy reorganization in May 2013. The transaction marks the union of three top U.S. Hispanic retailers.

“We are confident that Cardenas’ and Northgate’s financial strength, supply chain structure and commitment to family values and integrity will re-energize these stores, and allow them to continue providing the wide-range of products, high level of customer service and competitive prices that Pro’s Ranch customers have come to expect,” said Oscar González Reynoso, co-president of Anaheim, Calif.-based Northgate Gonzalez, which operates 38 stores in California. “We believe we can build upon the legacy of well-established values and the strong market presence that Pro’s Ranch is known for. This is a win for everyone — customers, employees, neighborhoods and families.”

'A Win-Win for Everyone'

Under the transaction, which is valued at $55 million, CNG Ranch will also obtain the use of Pro’s corporate office, next to one of the Phoenix stores, and a 151,000-square-foot warehouse, also in Phoenix. Operationally, Northgate’s team will take the lead, providing overall management and direction for daily operations, under the guidance of the CNG Ranch board of directors, which includes members of both the Cardenas and Northgate organizations.

All 11 Pro’s stores will remain open while CNG Ranch assesses the operational needs and unites the operations of the new organization. CNG Ranch will work closely with Pro’s existing management team to ensure that the chain’s customers, vendors and the stores’ surrounding communities experience no disruption in products, services or prices.

“Even though Pro’s Ranch has experienced a number of operational and financial difficulties over the last few years, it has continued to foster a fiercely loyal customer base -- one that took years to develop --and was even voted Arizona’s Retailer of the Year in 2012,” noted Jesus Cardenas, President of Ontario, Calif.-based Cardenas Markets, which currently has 26 stores in California and three in Nevada. “[W]e recognize the loyalty and patience of the 2,500 Pro’s Ranch employees and are happy to provide some closure and peace of mind for them moving forward.”

“These are two fine operators with whom we have had a 20-year relationship,” said Pro’s EVP and CFO Michael Provenzano of the deal. “It’s a win-win for everyone.”

Both Northgate and Cardenas said they have future growth plans. When asked about these plans, Mike Hendry, VP marketing at Northgate, told PG, "Both companies intend to grow independently, as both have consistently added stores over the last few years."

As to whether the two grocers planned to team up for future endeavors, Hendy noted: "Moving forward, there are no immediate plans to collaborate on new projects; however, we do feel strongly that there is a great opportunity in the greater Southwest region, [which is] why we invested in the 11 Pro's Ranch Market stores. But our first priority is to maximize our operations in these 11 stores and then look for additional expansion opportunities."