1. while wakefern may "only" be paying $150 million. do not forget about the assumption of debt which may be as high as $160 million.
which makes this a $300 million purchsase. And Big V is not even profitable with that debt.
Look at Village and FSM, with considerably less debt and stores doing $800,000 per week they barely eke out a 1% profit. How will the Big V stores fare with the equivilent of $10 million per store in debt and "only" doing $525,000 per week in sales up against virtually all non union competitors (Redner's, Wal Mart SuperCenters, Kmart SuperCenters, Weis, Price Chopper, Hannaford, etc.)
The numbers do not seem to be promising.
It will be difficult to subsidize Big V and run the crazy ads that ShopRite runs.
What is up with the 10% off for Christmas. This will be like all stores giving away probably 30,000 to 50,000 during a week when everyone will be shopping anyway and will be very unlikely to switch stores at Holiday time.
2. Purplerage where are you????
3. What Stop & Shop store is closing in FSM territory?
4. There is one thing you may be almost right on and that is it is not so sure that anyone will make a run at another Wakefern member since there was no really clear answer as to whjat happens to the penalty issue for leaving. However, if there is enough disturbance to the co-op as a result of the added weight of Big V, anything could be possible.
Foodarama sees financial impact from Big V FREEHOLD, N.J., Nov 30 (Reuters) - Supermarket operator Foodarama Supermarkets Inc. (AMEX:FSM - news) said on Friday that a decision by its food cooperative to acquire another cooperative member now in bankruptcy proceedings may have an impact on its financial results, but it's too early to say what the impact would be.
Foodarama said an agreement on Nov. 16 by Wakefern Food Corp. to acquire the assets of Big V Supermarkets was a material event, but that its effect on Foodarama's earnings remains to be seen, said chief financial officer Michael Shapiro.
Big V and Foodarama belong to Wakefern food cooperative, which provides distribution and other support to its members. Big V, a privately-held supermarket operator, filed for chapter 11 bankruptcy protection last year. It also filed earlier this year to withdraw from the cooperative, but the court ordered it to pay a penalty for leaving the cooperative to make up for lost volume.
Foodarama shares ended at $42, close to a 52-week high of $43, on Thursday when they last traded. Its shares have risen about 171 percent so far this year.
I think that Pathmark really got what they wanted here. They wanted to spend their money renovating stores but need to increase profit. They have now effectively driven up prices at Walkfern stores (because of the debt payment of the Big V buyout) Now they can go thru their renovation program knowing Walkfern will not be able to under price or even keep up with them. Jim Donald has done it again.