Dallas-based Fleming, the largest supplier of consumer package goods to US retailers, is acquiring privately-held companies Core-Mark International and Head Distributing, two of the nation’s foremost convenience-store distributors.
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The acquisitions further Fleming’s strategic transformation into a national, multi-tier supply chain for consumer package goods to all retailers, with about US$22bn in projected 2003 revenue.
Core-Mark, a leading piece-pick distributor to convenience stores and other retail customers in western US, had 2001 sales of US$3.4bn. It serves nearly 30,000 locations from its network of 19 distribution centers, including Circle K, 7-11 franchisees, Albertson’s and Safeway. Flemming expects this deal to close within 90 days.
Head Distributing, a Georgia-based distributor, operates two piece-pick distribution centers and serves 3,000 retail locations in six southeastern states. Head Distributing’s fiscal 2001 sales were about US$350m. Head’s largest customer is Ahold’s convenience operations and the acquisition closed yesterday [Tuesday].
Core-Mark’s solid presence in the west combined with Head’s southeastern positioning complements Fleming’s piece-pick strength in the midwest and east. Combined, Fleming will have a nationwide network of distribution centers that will serve about one fifth of the convenience store outlets in the US, along with many other retail customers.
Also, as a result of these acquisitions, Fleming said that it will have:
* significant opportunities to expand sales and marketing initiatives as one of only two piece-pick suppliers capable of national distribution to convenience stores and other convenience-related retail formats;
* a national, interconnected network of multi-tier distribution centers, with piece-pick (meaning products selected in single unit quantities and distributed in totes), case-pick (meaning products selected in case quantities, aggregated and distributed on pallets), and flow-through (meaning distribution in full pallet quantities);
* an increasingly efficient supply chain with expanded procurement and merchandising scale; and
* further diversification of its customer base, with enhanced sales and earnings growth potential.
Mark Hansen, Fleming’s chairman and CEO, commented: “These acquisitions benefit all of Fleming’s stakeholders.
“Our customers will be advantaged as we continue to drive costs out of the supply chain through the benefits of size and scale.
“Fleming associates, including the teams who will be joining us from Core-Mark and Head Distributing, will benefit as we continue to grow our enterprise and execute our business model.”
