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Spartan Stores announced that it will sell its convenience-store distribution subsidiaries L&L/Jiroch Company and J.F. Walker Company to The H.T. Hackney Company, a Knoxville, Tennessee wholesale convenience-store distributor.

H.T. Hackney and its affiliates are expected to pay Spartan Stores approximately $42 million in cash and assume certain liabilities.

The Spartan subsidiaries generated $720 million in sales during its last fiscal year.

The transaction does not include Spartan's subsidiary, United Wholesale Grocery Company; a 12 location cash and carry convenience-store distribution operation.

In a memo to all employees, John Sommavilla, executive vice president, supply chain, wrote that the company has "signed a definitive letter of agreement with the H.T. Hackney Company for an ongoing business relationship between our companies for distribution of products now distributed by L & L Jiroch to Spartan owned retail stores and Spartan independent customers.

"Consistent with our supply chain strategy on cigarettes, cigars, tobacco accessories, non-palletized candy and spices, the acquiring company will continue to be our designated distributor.

"In addition, Spartan Stores has agreed not to compete with H.T. Hackney on these same products currently sold to our existing grocery customers and traditional c-store customers by L&L Jiroch."
KC's View:
Somehow, that seems like an awfully low price for a business generating three-quarter-of-a-billion dollars a year.

It may have something to do with the inherent instability of the c-store business these days, as it is under attack from some many different competitors. And, it may have something to do with Spartan's need to improve its bottom line.

We can't help but feel that this isn't a good sign…but we're willing to be surprised.