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Delhaize selling 3 U.S. grocery chains to Bi-Lo

Belgian grocer Delhaize, which owns Food Lion, plans to sell 155 stores operating under the Harveys, Sweetbay and Reid’s banners to rival supermarket company Bi-Lo.

It’s the latest major change for Food Lion, a company that’s seen top executives shuffled, hundreds of job cuts and store closures over the past few years, as Delhaize attempts to revitalize its business. Bi-Lo is buying the grocery stores for $265 million in cash, Food Lion executives said.

Delhaize America employs more than 2,000 people in Salisbury, where Food Lion is headquartered. Harveys and Reid’s are both headquartered in Salisbury as well and have a small number of employees there. Both supermarkets also have corporate offices in Nashville, Ga.

“After the ownership transfer, we will review our corporate structure where specific or partial support of these banners (Harveys, Reid’s, Sweetbay) exist in order to remain efficient or to reinvest resources in Food Lion, Bottom Dollar Food, and Hannaford,” said spokeswoman Christy Phillips-Brown, via email.

Food Lion said Bi-Lo has also agreed to buy the leases for 10 former Sweetbay locations. Harveys, Reid’s and Sweetbay stores are concentrated in Georgia, Florida and South Carolina. Together, the 165 locations generated $1.8 billion worth of revenue in 2012 and employ 10,000 people, Food Lion and Bi-Lo said in a statement. The companies expect to close the deal in the fourth quarter.

“We believe this transaction represents a significant move towards simplifying our business and will allow for even greater focus at Delhaize America,” said Delhaize CEO Pierre-Oliver Beckers. “The transaction will further increase the financial flexibility required to execute our strategic priorities.”

The sale is the latest major change for Delhaize, which has been shaking up its business in an attempt to revive growth. Beckers announced earlier this month that he plans to step down as chief executive to make way for “a successor who will lead the group and its evolution into the future.”

Delhaize America said earlier this year that it was cutting 500 corporate jobs to lower expenses. Earlier this year, the company closed 33 Sweetbay stores in Florida and eight Food Lion locations, including one in Belmont.

In December, the company also replaced Food Lion president Cathy Green-Burns. And earlier last year, Delhaize closed 113 stores, including all Food Lion locations in Florida, and killed the Bloom banner, converting or closing those stores to other brands.

After the sale to Bi-Lo, Delhaize will operate only the Food Lion, Bottom Dollar and Hannaford supermarkets in the U.S. Food Lion remains the company’s largest supermarket chain in the U.S., with about 1,117 locations. Delhaize’s U.S. stores accounted for 64 percent of the company’s total revenue.

Securities filings show how Delhaize’s business has lagged in the U.S. The company had $19.2 billion worth of sales, 1,650 stores and 107,237 employees in the U.S. at the end of 2011. By the end of 2012, those numbers had fallen to $18.8 billion in sales, 1,553 stores, and 104,613 U.S. employees.

The company has been fending off challenges from expanding grocery competitors, including Publix Super Markets and Wal-Mart Stores Inc.

Now based in Jacksonville, Bi-Lo has been trying to bulk up and rebuild following a bankruptcy and acquisition by private equity firm Lone Star Funds. Bi-Lo acquired the Winn-Dixie supermarket chain last year for $560 million. The company operates more than 680 supermarkets.

Winn-Dixie also went through bankruptcy several years ago, closing all of its stores in the Carolinas as a result.

Portillo: 704-358-5041 On Twitter @ESPortillo
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