Wednesday, April 19, 2000
Royal Ahold, the international food provider, announced today it has signed a definitive agreement to acquire Golden Gallon, a leading operator of fueling stations and merchandise convenience stores in the southeast of the United States. Golden Gallon operates 134 stores with 1999 sales of approximately USD 300 million. Fuel accounts for almost two-thirds of total sales, with tobacco, milk and packaged beverages making up most of the remainder.
Golden Gallon was founded in 1959 and is headquartered in Chattanooga, Tennessee. Its fuel, food and dairy stores are strategically located along major interstate highways, in sizeable metropolitan areas and in suburbs with strong residential growth. There is no geographic overlap between Golden Gallon and BI-LO. Golden Gallon meets the mobile customer's requirements by offering a quality fuel-and-shopping option. With an average selling space of 3,000 sq.ft., 126 of the stores are company owned and eight are leased.
The transaction
The transaction is structured as an asset purchase and covers the 40-year-old Golden Gallon brand name, the stores, their inventory and cash. Assets include 20 sites for future stores and other real estate. The acquisition is subject to regulatory approval and is expected to close by the end of May.
Golden Gallon integrated into BI-LO
Golden Gallon employs 1,100 people and will be operated as a separate regional division of BI-LO, one of five Ahold operating companies in the United States. BI-LO currently operates 281 supermarkets in South Carolina, North Carolina, Georgia, Tennessee and Alabama with 1999 sales of USD 3.0 billion and 24,000 associates.
Synergy benefits
Golden Gallon and BI-LO are expected to benefit from synergy initiatives leading to considerable cost savings. Benefits include leveraging Ahold's procurement capabilities on many Golden Gallon items. BI-LO can benefit from Golden Gallon's significant volume in fuel and tobacco as it introduces convenience store formats and fueling stations at select supermarket locations.
Remarks by Bob Tobin, President & CEO, Ahold USA
'Since our 1977 acquisition of BI-LO, we have watched and admired the way Golden Gallon goes about its business. Its seasoned management team has considerable industry experience and we value that knowledge. This move is in line with our US initiatives to meet the mobile customer's many requirements by offering a fuel-and-shopping option in high-quality convenience stores along busy highways.'
Remarks by Jon Wilken, President & CEO, BI-LO
'Our acquisition of Golden Gallon will position us prominently in the convenience store business. It is an important step forward for BI-LO, allowing us to expand into a segment of the retail business that is experiencing substantial growth. This is a win-win situation for both our operations, and ultimately for our customers who will enjoy the benefits.'