Bear Stearns Fall Could Hit Balducci's

JON SPRINGER

NEW YORK — The surprise Bear Sterns fire sale should have no immediate impact on the Balducci's fine foods chain, which is owned by an affiliate of the collapsing investment bank, officials told SN last week. Long-term effects, however, were considerably more uncertain.

Balducci's, which operates 10 gourmet stores on the East Coast, was purchased a little more than four years ago by Bear Stearns Merchant Banking, a private equity buyout fund. BSMB operates independently of Bear Sterns, although the investment bank is one of the limited partners in the fund, Melissa Daly, a spokeswoman for Bear Stearns Merchant Banking, told SN.

JPMorgan Chase last week said it would buy Bear Stearns for about $2 a share — a move officials said would save the 85-year-old investment bank from bankruptcy. Bear Stearns, which traded as high as $170 per share a year ago, was burned badly by gambling on mortgage-backed securities and had written off billions in losses in recent months related to the so-called subprime mortgage crisis.

However, it is “business as usual” at Balducci's, Daly said. “There are no changes in the day-to-day business.”

The longer-term picture at BSMB is somewhat murkier, however. According to various reports, questions remain as to whether BSMB will be able to continue its funding commitments without Bear Stearns' support; and about JPMorgan Chase's desire to assume Bear Stearns' role as an investor in the fund. BSMB could also continue as a stand-alone operation, reports suggested.

BSMB acquired Balducci's, then known as the Sutton Place Group, in December 2003. It renamed itself Balducci's after its flagship New York City store, and rebranded stores in the Washington, D.C., and Connecticut markets operating under the Hay Day or Sutton Place Gourmet names. It named Barbara Parasco, a former Macy's executive, as its chief executive officer in 2006.

Although it was speculated that the BSMB investment could spark aggressive expansion, Balducci's operates one less store today than when it was acquired.

BSMB also owns the retailer Vitamin Shoppe, among other investments.