HANNAFORD MOVES SOUTH WITH DEAL TO BUY WILSON'S

DAVID ORGEL

WILMINGTON, N.C. -- Hannaford Bros. last week cast its net into the Southeast by reaching an agreement to purchase Wilson's Supermarkets here.

The acquisition will give the Hannaford chain, based in Scarborough, Maine, a new regional base for growth beyond its New England and upstate New York marketing areas. Hannaford will pay $120 million to acquire the 20-unit privately held Wilson's chain, whose 1994 sales are expected to exceed $200 million. In addition to these 20 units, which are in North and South Carolina, the purchase includes five other store sites, three of which are already under construction. Several shopping centers are also included in the deal.

Hannaford, in a statement, said it is also negotiating the purchase of other supermarket sites in the region. These would further add to the growth of the Wilson's chain, said Larry Plotkin, Hannaford's senior vice president of corporate development and planning, in an interview with SN. The company said its plans represent

"a strategic approach to Hannaford's growth in the Southeast."

The Wilson's acquisition, which will be financed by cash and cash items, short-term investments and existing lines of credit, is expected to be completed next month.

"The Wilson's stores form a solid base on which we can grow our business in the region," said Hugh Farrington, Hannaford's president and chief executive officer. "The company is established and profitable. We can learn from them and build on their successes as we go about acquiring new store sites and opening new stores in the region."

Hannaford said it expects the Wilson family to continue to manage the stores, which will remain under the Wilson's banner. Larry Wilson, who is Wilson's chief operating officer, will be placed in charge of the chain and report directly to Farrington, according to Plotkin. Larry's father, Alan Wilson, who has been chairman and president, is expected to retire.

Larry Wilson could not be reached for comment about the acquisition.

The Wilson's stores average 32,000 square feet, while new prototypes are about 35,000 square feet, according to Helen Chase, Hannaford's director of corporate communications. The Wilson's stores are now primarily supplied by Scrivner Inc., which is being acquired by Fleming Cos. in a deal expected to be completed by mid-summer. Plotkin said no distribution changes are expected for the near term. However, he added that Hannaford may consider self-distribution in the Southeast eventually as its presence grows. Both Fleming and Scrivner are based in Oklahoma City. Hannaford, whose annual sales are in excess of $2 billion, operates 95 supermarkets under a variety of banners. Financial analysts viewed the acquisition as a good move for Hannaford because the New England and upstate New York areas provide the chain with limited growth opportunities. However, some analysts said the price was on the high side.

"From what I've seen, it looks like a good deal for them," said Ed Comeau, a securities analyst with Lehman Bros., New York. "The initial price of $120 million looks a little high. But the deal includes cash, inventory and real estate. So with that it seems like a reasonable acquisition in terms of price, even if it is at the upper end in terms of value." He predicted that Hannaford would spread out in North and South Carolina and possibly into Virginia. Chuck Cerankosky, an analyst with Hancock Institutional Equity Services, Cleveland, said he expects Hannaford will want to achieve a fast pace of growth.

"The strategy would be to grow store base and add distribution," he said. "They would want to move from 20 or 25 stores to the point where they can support self-distribution relatively quickly."