MECHANICSVILLE, Va. -- Richfood Holdings here last week signed a letter of intent to acquire Norristown Wholesale, a Norristown, Pa.-based produce wholesaler.
The move would give Richfood's Pennsylvania arm a full range of fresh produce and some other perishables -- not offered at the division now -- and open the door for the wholesaler to grow its fresh meat business there, J. Stuart Newton, senior vice president and chief financial officer, told SN last week.
"We have told the market that we want to be in the Pennsylvania area in perishables. This is our entrance into produce, and it allows us to focus our efforts on building the meat business there," Newton said, noting that the deal would make Richfood the largest produce procurer on the East Coast. Fresh meat volume in Pennsylvania would be expanded primarily by adding more customers and possibly by acquisition, he said. "We'll probably look to build that right now through adding new customers. We're just getting started."
Norristown Wholesale had revenues of about $120 million last year. It supplies fresh produce to more than 400 supermarkets in Pennsylvania, Delaware, Maryland, New Jersey and Virginia, some of which would be new customers for Richfood, according to Newton. Stores that have supply agreements with Norristown Wholesale, he said, include Genuardi's Family Markets, Clemens Markets, Farm Fresh, Ahold's Giant Food and A&P's Super Fresh.
"This acquisition will permit us to achieve our strategic goal of expanding our distribution of produce and perishable goods much more quickly than had been anticipated. We will work with Norristown's current management team and employees to continue their high level of customer service and to grow their business," said Donald D. Bennett, Richfood chairman and chief executive officer.
Richfood would operate out of Norristown Wholesale's current warehouse, which is roughly 150,000 to 160,000 square feet, Newton said. Richfood's Pennsylvania division has two distribution facilities totaling about 1 million square feet in Harrisburg, Pa., plus a 6.3 million-cubic-foot frozen and refrigerated warehouse in West Point, Pa., which does some fresh meat business, Newton said.
Terms of the acquisition were not disclosed. A definitive purchase agreement and due diligence are pending, but Newton said Richfood expects to complete the transaction in the next several weeks. Richfood said it would offer employment to all Norristown's current employees.