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Winn-Dixie Stores announced yesterday that it is going private, selling the company to Bi-Lo LLC for $560 million.

According to the Wall Street Journal story this morning, Bi-Lo will pay $9.50 per share for Winn-Dixie shares, “a 75% premium to its Friday close, at which time the stock was down 24% so far this year.”

Bi-Lo, which is owned by private equity group Lone Star Funds, currently operates 207 supermarkets in North Carolina, South Carolina, Georgia and Tennessee, while Winn-Dixie has 690 grocery stores in eight Southeastern states. The announcement says that there is no overlap between the two companies, and hence there should be no regulatory hurdles to overcome.

“With no overlap in our markets, the combined company will have a perfect geographic fit that will create a stronger platform from which to provide our customers great products at a great value, while continuing to offer exceptional service,” says Bi-Lo Chairman Randall Onstead.

As the Journal notes, “Both companies had faced difficulties over the past few years, with Winn-Dixie filing for Chapter 11 bankruptcy protection in February 2005 and emerging a year later with hundreds fewer stores. Bi-Lo filed in 2009 as a result of maturing debt and exited a year later.”

The two companies say no decision has been made about leadership positions at the newly combined company, which will continue to operate under both banners.

The deal is expected to close within 120 days.
KC's View:
Industry experts tell me that this is a smart deal, especially for Winn-Dixie, as it is being acquired by a smaller but stronger retail entity. A lot of people simply don’t think that Winn-Dixie had the muscle to compete in a marketplace dominated by bigger and more accomplished players. In addition to taking away some of the demands that come with being as public company that has to be managed as much for Wall Street as Main Street, this also will give the combined company a lot more buying power, which should enable it to offer lower prices.

As for leadership ... while it is likely that the new company’s top positions will be take by people already within the fold, it also is at least possible that they could bring someone in from the outside, someone with experience in motivating people, integrating operations and helping grow companies. But we’ll see.

BTW ... Almost as quickly as the acquisition was announced, a number of law firms - Powers Taylor LLP, Levi & Korsinsky, Harwood Feffer LLP, and others - said that they were investigating the sale - and, essentially, trolling for potential clients.

Which is interesting, since Bi-Lo is paying a 75 percent premium for Winn-Dixie’s shares, and Winn-Dixie recently has been suffering from declining same-store sales. And while I am woefully ignorant about how such things work, it seems to me that anyone in possession of Winn-Dixie shares ought to be fairly happy about the price being paid, and anyone interested in the retailer remaining a viable shopping alternative ought to thing that the odds are better today than they were last week.

But that’s not really what the legal maneuvering is about, is it?