In a deal that could extend Tops Markets LLC from New York and Pennsylvania to New Hampshire and Vermont, the supermarket chain has bid for Syracuse-based competitor Penn Traffic Co.
The $85 million deal has been accepted by Penn Traffic and recommended to the U.S. Bankruptcy Court for approval. On Nov. 18, Penn Traffic filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code. Prior to the filing, Penn Traffic had sold its wholesale business segment to focus on retail.
Since the filing, Penn Traffic has continued to operate 79 P&C, Quality Markets and BiLo stores in New York, Pennsylvania, Vermont and New Hampshire. It employs roughly 5,800 people.
Tops, based in a suburb of Buffalo, has submitted a comprehensive bid, including cash as well as additional value created by some $100 million in reductions in unsecured claims made against Penn Traffic by UFCW Local One Pension Fund and C&S Wholesale Grocers—the distributor who purchased Penn Traffic’s wholesale business in December 2008.
Action on the recommendation is expected to be taken Friday by the bankruptcy court.
In a statement Friday, Frank Curci, Tops president and CEO, said, “From the very beginning of our transition to a locally operated company, we have pledged to invest in the markets we serve, and to grow and strengthen our position as the largest grocery chain in the region. This new opportunity allows us to further fulfill that pledge as we look forward to meeting the needs of our new neighbors and customers, providing them with a positive shopping experience that focuses on great variety, value and service.”
Founded in 1962, Tops was sold to Dutch firm Koninklijke Ahold N.V., operating as Ahold USA in the United States, in 1991. In 2007, the company was sold to a group of private investors in a deal valued at $310 million. The acquisition included 68 Tops stores, 22 of which were in the Rochester area. At that time, Tops employed approximately 2,600 people here and 10,000 companywide.
Over the last two years, Tops management has added 140 jobs to its Williamsville headquarters and initiated a $150 million capital improvement plan that included store remodeling.
“Tops is very familiar with the localities served by Penn Traffic, and it is our goal to keep as many jobs and operate as many stores, without any interruption in service, as we possibly can,” said Kevin Darrington, Tops’ chief financial officer. “We also plan to invest in those stores that are in need of upgrades in an effort to best serve our customers and associates.”
Bank of America Merrill Lynch and Morgan Stanley are acting as financial advisers to Tops in the transaction.
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