Tops Friendly Markets management is preparing to take control of the US supermarket chain, having inked a deal to acquire a majority stake in the business held by Morgan Stanley Private Equity.
The acquisition of Morgan Stanley’s 66% stake is backed by the six members of Tops’ executive management team, including CEO Frank Curci. COO Kevin Darrington, CFO Rick Mills, SVP operations John Persons, SVP human resources Jack Barrett and SVP general counsel and secretary Lynne Burgess will all increase their stakes in the supermarket operator.
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Curci already holds a near-3% stake; other members in the executive management team hold around 1% each.
Morgan Stanley acquired its stake in Tops in 2007 for US$310m from Dutch retail giant Ahold. New York investment fund Graycliff Partners has also held a significant minority stake in the grocer since 2007.
Upon completion of the deal, management will “own all assets and liability”, a spokesperson for the retailer told just-food. This includes debt of around US$650m.
The private-equity investor has been a “very supportive partner” over the past five years, the spokesperson added.
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By GlobalData“This time period has been one of strong growth for Tops. We’ve doubled our number of stores, increased our geographic footprint and added new jobs in the markets we serve.”
Tops operates 159 stores in New York state, northern Pennsylvania and western Vermont.
During the first half of the year, the company saw total sales rise 6% to $1.43bn. However, like-for-like sales dropped 0.5% in the period and the group racked up a net loss of $9.5m, down from a profit of $10m in the comparable period of 2012. Lower profitability was primarily driven by financing costs.
The sale will not prompt a change in strategic direction, the spokesperson added. “It’s business as usual for Tops. The Tops management team will stay focused on achieving our vision for Tops… We believe that this WNY-based management structure is a very positive development for Tops and the communities we serve.”
The transaction is subject to certain customary conditions and is expected to be completed in calendar year 2013.
