PEWAUKEE, Wis. -- Roundy's said here last week it has signed a letter of intent with Copps Corp., Stevens Point, Wis., to acquire Copps for an undisclosed amount of cash.
The transaction is expected to be finalized in late spring.
The acquisition will boost Roundy's volume from nearly $3 billion to approximately $3.6 billion and will give Roundy's access to two Copps facilities -- a 420,500-square-foot dry grocery distribution center and a 130,000-square-foot perishables facility in Stevens Point -- to supplement its 745,000-square-foot full-service warehouse here, "which is bursting at the seams," a spokesman told SN.
The deal will also boost Roundy's corporate-store sales base from approximately $950 million, or 33% of pre-merger volume, to about $1.5 billion of post-merger volume, or 41%, the spokesman said. "Our goal is to have at least half of total volume come from corporate stores," the spokesman noted.
In addition, because Copps is an IGA wholesaler, the transaction will give Roundy's access to IGA licensing arrangements and promotions, he said.
The acquisition will move Roundy's volume past three other wholesalers -- Unified Western Grocers, Los Angeles, at $3.1 billion; Associated Wholesale Grocers, Kansas City, Kan., at $3.2 billion, and Spartan Stores, Grand Rapids, Mich., at $3.5 billion -- and within striking distance of Nash Finch Co., Minneapolis, at $4 billion.
Roundy's and Copps have operated within Wisconsin since the late 1800s, and the merger is being touted by the companies with the slogan, "Building on a Wisconsin Tradition."
According to Gerald F. Lestina, president and chief executive officer of Roundy's, "This opportunity to put our two companies together recognizes the culmination of similarly traveled paths through Wisconsin history.
"As both companies enter a third century of business, the future looks bright in the face of competition -- competition that includes multinational corporations that continue to exert their influence on our Wisconsin economy."
According to Michael Copps, chairman and chief executive officer of Copps, his company was looking for a merger partner to secure its future. "Our family has recognized that to secure the future of Copps Corp., we needed to join with an organization that could provide the systems, resources and capital necessary to expand in the market areas we serve."
A Copps spokesman said the company had been expanding at the rate of one to one and a half new stores a year, funded by internal profits. "But with all that's going on in the industry," he said, "we felt we had to grow at a more accelerated pace -- to open three, four or five new stores a year -- but we didn't have enough money to do that. We realized that to succeed we had to look for a financial or strategic partner."
He said Copps hired a consultant to seek a partner, and that consultant brought Copps and Roundy's together. Although the two companies have operated in Wisconsin for more than a century, Roundy's had concentrated on wholesale and retail opportunities in southern Wisconsin, while Copps built from central Wisconsin northward, the Copps spokesman said.
Roundy's, founded in 1872, is a retailer-owned cooperative that operates 43 corporate stores in four states, including 39 Pick 'n Save locations (36 in Wisconsin, two in Ohio and one in Indiana) and four smaller units, called Orchard Markets, in Ohio. It also licenses the Pick 'n Save name to 37 retail customers in Wisconsin. In addition, the company serves as a wholesaler to more than 800 member stores in 12 states.
Copps, which was founded as a wholesaler in 1892, operates 22 supermarkets in Wisconsin and serves as a wholesaler to 43 independent customers, including 37 in Wisconsin and eight in Michigan, that carry the IGA logo. Roundy's said it hopes to retain those retailers as wholesale customers after the deal is consummated.
The company also said it will retain the Copps name on the existing stores and may expand the name as it opens new stores in areas where the banner has equity.
"Many of their stores are in areas of Wisconsin that we don't serve," the Roundy's spokesman told SN. "The Copps name carries weight in many of these communities, and this deal will enable us to expand both the Copps and Pick 'n Save names, whichever is stronger in a given area."
He said the stores are similar in size, averaging 55,000 square feet, and have similar marketing characteristics.
Five members of the Copps family are expected to retire once the deal is consummated, including Michael Copps; Timothy Copps, president and chief operating officer; Fred Copps, executive vice president, wholesale; Thomas Copps, executive vice president, public affairs, and Don (Lucky) Copps, executive vice president, merchandising. All are great-grandsons of E.M. Copps, who founded the company when he began selling food and grain to loggers, rivermen and farmers.