FIRM BUYS CONTROLLING STAKE IN JITNEY JUNGLE

LISA A. TIBBITTS

JACKSON, Miss. -- A New York investment firm last week purchased a majority interest in Jitney Jungle Stores of America here for about $400 million.

The firm, Bruckmann, Rosser, Sherrill & Co., purchased the interest from members of the founding McCarty and Holman families. BRS plans to leave senior management in place and may eventually take the retailer public, according to Harold Rosser, one of the principals.

The deal gives Jitney financial backing that will allow it to step up its store expansion program and possibly move into new areas, according to a statement from the retailer.

BRS is a newly established investment

group comprising former senior officers of Citicorp Venture Capital, New York. Along with Rosser, the principals who left Citicorp last February are Bruce Bruckmann, Stephen Sherrill and Stephen Edwards. This is the firm's first investment commitment, according to the statement.

Roger Friou, vice chairman of Jitney, told SN he expects the deal to close in mid-February. Friou, along with three other executives, will hold a minority stake of common shares in the company. Those other executives are W.H. Holman Jr., chairman, president and chief executive officer; his son W.H. Holman III, senior vice president, and David Essary, executive vice president. Members of the original founding family will continue to own Jitney preferred stock.

Jitney Jungle, which was founded 83 years ago, will now step up growth, according to Friou.

"We plan to certainly continue and accelerate our historical rate of growth," Friou said.

"We've grown principally through acquisition over the past seven or eight years, and we believe we'll be able to accelerate our new-store openings from the ground up. We have probably averaged three to four [stores that were built from the ground up each year] -- not any more than that -- for the past six or seven years."

Jitney Jungle, which owns stores in Mississippi, Alabama, Tennessee, Arkansas, Louisiana and Florida, has annual sales of $1.2 billion.

The company operates 74 supermarkets under the Jitney Jungle banner, which range from 12,000 to 58,000 square feet. The company also operates 31 deep-discount units under the Sack and Save and MegaMarkets banners, which run 50,000 to 60,000 square feet.

Friou added that Jitney is about to open stores in Gulfport, Horn Lake and Rankin County, Miss.

Further, construction will begin soon on a new $7 million produce warehouse here. The company also has six distribution facilities throughout Jackson, including a 415,000-square-foot grocery distribution center, a 24,000-square-foot bakery and a 60,000-square-foot nonfood warehouse.

Friou said he does not expect BRS to make any immediate changes in the retailer.

"We plan to just continue with our mode of operation that we have at this time," he said. Friou could not comment more specifically on Jitney's growth plans for the future.

Rosser of BRS said, "We'll continue to grow the company. It's got a strong track record, good growth potential, a good management team.

"There are successful [supermarket companies] and there have been unsuccessful ones. We think this will be a successful one."

Rosser said the firm had been searching for a supermarket company to purchase. "We looked at a lot of them. We've looked at most of them that have been for sale," he said. He declined to name the other grocery concerns that had been under consideration, but he noted that BRS would consider making future supermarket industry acquisitions.

Rosser confirmed reports that the firm has paid $400 million for its stake in Jitney and that the chain may go public, but he could not say when. He would not comment on BRS's level of involvement with Jitney or possible board representation.

Discussions between BRS and Jitney had been ongoing for several months, Friou said, because the company's owners wanted to terminate their stake in it.

Friou and the three other executives will purchase their minority interest in Jitney from BRS, but he declined to quantify management's stake in the business or to specify the price the management team will pay for their ownership.