INDIANAPOLIS -- Marsh Supermarkets here said it has signed an agreement in principle to purchase the assets of O'Malia Food Markets, an eight-store independent based in Carmel, Ind., for undisclosed terms.
Marsh said the deal is expected to be finalized "in the next several weeks," pending the working through of several contingencies, which the company did not specify.
The acquisition will add $56.5 million in sales volume to Marsh's revenues of $1.9 billion for the year ended April 1.
It will be Marsh's third -- and largest -- acquisition in three years, following the purchase of five Ross Supermarkets in Muncie, Ind., a year ago and three Cox Supermarkets in Richmond, Ind., in late 1999. Of the eight stores, one was closed and seven were converted to Marsh's price-impact banner, LoBill Foods.
Marsh said the O'Malia stores will become a separate operating division that will retain the O'Malia name, with plans to expand the banner. Danny O'Malia, president, will retain that title in the new division, and other family members will also be asked to remain, Marsh said.
Marsh will continue to seek additional acquisitions, said Don E. Marsh, the chain's chairman, president and chief executive officer. "We are in the acquisition mode, and we're ready to buy," he declared.
Although he declined to name specific companies, Marsh said the expansion could extend beyond the chain's base of central Indiana and western Ohio.
O'Malia's eight stores include four stores here and four in neighboring Hamilton County -- upscale stores with a strong image in meat, service, variety and quality, Danny O'Malia said.
All eight units compete with Marsh locations, he pointed out, "but our stores are too small to convert to the Marsh format. In addition, our stores represent a market extension that Marsh cannot get, nor are our customers likely to shop at a Marsh store. But we believe the synergies we have will help both of us focus on other competitors rather than each other."
Marsh is also committed to helping the O'Malia banner expand to new locations, he added.
The O'Malia stores range in size from 25,000 square feet to 40,000 square feet, with the company's original store of 8,500 square feet and another of 4,200 square feet that was converted a year ago to a specialty store with a strong emphasis on meat called Joe O'Malia Quality Meat Market. Danny O'Malia said Marsh is considering retaining that store and possibly expanding the format to other locations.
Asked about the contingencies that must still be worked through, O'Malia told SN, "The two companies kept their talks secret for several weeks, but we decided to announce a preliminary deal at this time before our people heard rumors, though we still have some details to work out."
Prior to the acquisition, Marsh operates 289 stores, encompassing 70 conventional Marsh Supermarkets, 29 price-oriented LoBill Foods, two Savin*$ limited assortment stores, and 188 Village Pantry convenience stores, plus a convenience-store distribution company, a food-service business and a floral business.
Don Marsh told a press conference here the decision to acquire O'Malia grew out of informal discussions between the two companies about opportunities in the retail-food service business. "The more we talked, the more it seemed to make sense for us to join forces and go forward together," Marsh said.
