Newspaper article The Florida Times Union

Winn-Dixie Buys Stores from Chain in Bankruptcy

Newspaper article The Florida Times Union

Winn-Dixie Buys Stores from Chain in Bankruptcy

Article excerpt

In a move characterized by Winn-Dixie officials as one that will help the company with its restructuring plans, the Jacksonville-based supermarket retailer announced yesterday it has agreed to pay $85 million to buy 106 stores from Jitney-Jungle of America Inc., headquartered in Jackson, Miss.

The deal calls for Winn-Dixie to acquire 72 grocery stores, 32 fuel centers and two liquor stores plus the inventory for the stores that generate about $650 million in annual sales.

Since Oct. 12, 1999, Jitney-Jungle has been operating under Chapter 11 of the U.S. Bankruptcy Code. Jitney-Jungle owns and operates 188 grocery, gasoline and liquor stores in Florida, Alabama, Mississippi and Louisiana.

"This acquisition is a very good strategic fit for Winn-Dixie," said Allen Rowland, Winn-Dixie's president and CEO, in a a released statement. "These stores will give us good market share in a new geographic area. The synergies of the excess capacities of our Hammond, La., retail support center and our manufacturing operations and Winn-Dixie's buying power should provide results for the company."

Industry observers say there is a chance the deal could assist Winn-Dixie in its restructuring plans.

Meredith Adler, an analyst at Lehman Brothers in New York City, says the buy will give Winn-Dixie an opportunity to leverage an existing distribution in Louisiana that is presently underutilized.

"It could be a good for the company, if they do what they say they are going to do," Adler said. "They are paying a good price for the stores."

Before Jitney-Jungle entered bankruptcy proceedings, the grocery stores that Winn-Dixie is buying had higher profit margins last year than Winn-Dixie stores, according to Mary Lou Burde, an analyst at S&P Ratings Services in New York City. Burde says because of that Winn-Dixie has a chance to revive those stores. …

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