SALISBURY, N.C. -- Food Lion here said it has signed an agreement to purchase the assets of Food Fair of North Carolina, an 11-store chain based in Winston-Salem, N.C.
The transaction, which will be finalized in March, represents the chain's first major acquisition since 1984, when it purchased 23 supermarkets from Giant Markets, Kingsport, Tenn.
The transaction includes the 11 stores, their inventory and equipment but does not include Food Fair's 90,000-square-foot grocery distribution center and office facility and a 15,000-square-foot freezer. William P. Messick, Food Fair vice president, said the company is attempting to lease those buildings to other tenants.
Food Lion said it will operate nine of the 11 Food Fair stores; two others, which compete with existing Food Lion locations, will be sub-leased to other tenants.
Food Lion also said it will close two of its existing stores that overlap Food Fair locations and, later in the year, will close a third Food Lion after a Food Fair is remodeled.
Tom Smith, Food Lion president and chief executive officer, said the acquisition is part of the chain's growth strategy, disclosed in 1995, that calls for expansion through new construction, remodels and acquisitions.
"The purchase of Food Fair's assets provides us with the unique opportunity to grow our business by combining Food Lion's operation with another very successful North Carolina grocery chain," Smith said.
The Food Fairs are located in Forsyth County, the state's largest, where Food Lion operates 41 stores. The stores being acquired range in size from 22,000 to 30,000 square feet.
Food Fair was founded by J.E. Messick and R.F. Messick in 1947. According to William P. Messick, "We are pleased that Food Lion was able to acquire our sites, and we have every confidence that Food Lion will carry on our tradition of serving customers with the attention to quality, low price and good service that made Food Fair a household word in this area over the past 48 years."