Lone Star Takes Bi-Lo Off the Block

MARK HAMSTRA

Dallas — Lone Star Funds here said current market conditions have forced it to take the Bi-Lo chain, which it acquired from Ahold in 2005, off the market.

“There was a lot of interest in the company, but just based on marketplace conditions, a sale is not going to happen in the near future,” Ed Trissel, a spokesman for Lone Star, told SN. “We will focus on our strategic plan and company objectives.”

He said private equity firms have become less acquisitive recently because financing has become more expensive.

In April, Lone Star said it had retained Merrill Lynch and William Blair & Co. to explore the potential sale of the chain, which it had acquired, along with sister chain Bruno's, in 2005 from Ahold for $560 million. Bi-Lo operates 230 stores in four Southeastern states.

“I think the problem right now is that the credit crunch has hurt the private equity players as far as the number of acquisitions they can go after,” said Mitchell Corwin, an analyst with Morningstar, Chicago, adding that there's also “no clear acquirer among strategic buyers.”

Industry sources speculated that Publix Super Markets, Lakeland, Fla., might have been interested in purchasing Bi-Lo. A spokesperson for Publix could not be reached for comment.

Corwin suggested that Salisbury, N.C.-based Food Lion parent Delhaize “is a possibility, but I don't get the sense that they are being real aggressive as far as looking for candidates.”

Milwaukee-based Roundy's Supermarkets, another strong regional that was said to be for sale, also remains within the holdings of investment firm Willis Stein, Chicago.

Several other private equity acquisitions of supermarkets have recently been announced, however, including the purchase of Tops Markets by Morgan Stanley Private Equity and the purchase of the Henry's Farmers Market and Sun Harvest banners by Apollo Management-owned Smart & Final.