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Richfood Holdings to buy Super Rite for $320 million


Richfood Holdings Inc. will gobble up Super Rite Corp. in an acquisition valued at $320 million, catapulting the Richmond, Va.-based food distributor and retailer into the top echelon of the industry with more than $3 billion in annual sales.

With the addition of Super Rite of Harrisburg, Pa., announced yesterday, Richfood would double its sales and move from 12th to fourth place among wholesale food suppliers nationally, serving more than 1,700 grocery stores in the mid-Atlantic region.

The deal includes Super Rite's Randallstown-based retail arm, consisting of seven Basics supermarkets and seven Metro superstores in the Baltimore metropolitan area as well as a Metro in Dover, Del.

Super Rite's major customers include Giant and Shoppers Food Warehouse among 238 supermarkets supplied in Pennsylvania, New Jersey, Delaware, West Virginia, Virginia and Maryland. Richfood sells groceries to 1,500 stores, including Farm Fresh and Ukrop's, in Virginia, Washington, D.C., and Maryland.

No immediate changes are expected in personnel and operations.

Super Rite represents the latest Eastern seaboard expansion for Richfood. In February, Richfood purchased the wholesale operations of Norfolk, Va.-based Camellia Food Stores Inc. for about $10 million, and in August the company acquired Philadelphia frozen-food supplier Rotelle Inc. for $52.8 million. In January 1993, Richfood acquired the civilian wholesale division of Baltimore-based B. Green & Co. Inc. for about $55 million.

With Super Rite's acquisition, "the combined organizations will be the largest, most diversified wholesale company operating and based in the mid-Atlantic," said Jeff Metzger, publisher of Food World, a regional trade newspaper based in Columbia.

More Richfood acquisitions could follow.

"It's impossible for me to speculate, but we're always on the lookout for those opportunities," said President and Chief Operating Officer John Stokely. "We're going to continue to grow the wholesale business and retail business."

Under terms of the agreement announced yesterday, Richfood Holdings will assume about $109 million in Super Rite debt and issue 1.02 shares of common stock for each share of Super Rite common stock. Based on Richfood's recent average stock price, that represents a value of about $22 per Super Rite share. Super Rite stock, which closed at a 52-week high of $18.50 per share last week after announcing a 15.6 percent jump in first-quarter earnings, hit a new high yesterday, finishing $20.75, up $2.25. Richfood closed yesterday at $21.625, down $1.375.

The deal, approved by the boards of directors of both companies, is subject to approval by shareholders of Richfood and Super Rite.

Super Rite has indefinitely postponed its July 12 meeting. The company is expected to hold a shareholders meeting in September to vote on the deal. Richfood shareholders will vote at the company's annual meeting, to be held on the same day as the Super Rite special session.

After the merger, expected to close as early as October, former Super Rite shareholders will hold approximately 31 percent of Richfood's total common stock outstanding. Super Rite, which will operate as a separate, wholly owned subsidiary of Richfood, has about 9.6 million shares of common stock outstanding; Richfood, about 21.4 million.

Super Rite posted net income of about $13.0 million, or $1.34 per RTC share, on sales of $1.47 billion for the year ended March 4. Richfood Holdings reported net income of $25.4 million, or $1.19 per share, on sales of $1.52 billion for the year ended April 29.

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