By BRIAN LEAHY
of The Gazette
The acquisition of Roundy's Inc., parent company of Copps Food Centers of Stevens Point, by an investment firm could mean more ownership changes in the future, grocery industry analysts said.
Investment firms make money by using both equity and debt to buy a company and then later selling that company at a profit. A typical timeline is to sell a company four to seven years later so debt remaining from the original acquisition can be reduced.
Roundy's announced Tuesday that it had entered into a definitive acquisition agreement with Willis Stein and Partners, a Chicago-based private equity investment firm. Financial terms of the agreement weren't disclosed. The deal, which is subject to regulatory and shareholder approval, is expected to be completed in May. Roundy's headquarters is expected to remain in Pewaukee.
Willis Stein has made investments in 40 companies and now manages about $3 billion in assets. It has investments in media, business services, information technology, telecommunications, manufacturing and health care industries. Willis and Stein was founded in 1994 by John R. Willis and Avy H. Stein, former directors of Continental Bank's venture capital business.
Roundy's is one of the nation's oldest and largest food wholesale and retail companies. Founded in 1872, Roundy's today is a company approaching $4 billion in annual sales, supplying more than 800 supermarkets in 14 states from nine distribution centers. It is the leading supermarket retailer in Wisconsin, operating as Pick 'n Save Stores and Copps Food Centers. Roundy's employs more than 13,000 workers and is structured as a cooperative.
Roundy's acquired the Copps Corp. in 2001 after buying 100 percent of its stock. The business that would become the Copps Corp. got its start in Stevens Point in 1892 when E.M. Copps began selling food, grain and other items to loggers, river men and farmers. It incorporated in 1912 and continued under family ownership until its sale to Roundy's was completed last year. In 2000, the Copps Corp. had sales of about $625 million and 6,000 employees.
"In the 130-year history of Roundy's, there have been many critical events that have led to the success of our company," said Gerald F. Lestina, president and CEO of Roundy's. "This transaction (with Willis Stein) is a reflection of the outstanding work that all our managers and associates have done to contribute to that success. I am excited that with this transaction, Roundy's will continue its outstanding growth and excellent service to our customers. I am enthusiastic about the future of Roundy's for all of our associates as we move to yet another step in our storied history."
Lestina will step down. Robert Mariano, former CEO of Dominick's Supermarkets Inc. of Chicago, will become CEO, president and chairman.
After its acquisition of the Copps Corp., Roundy's had 40 percent of the market share in Wisconsin. It is now the 29th largest grocery retailer in the U.S. Company officials have said Roundy's needed to restructure in the face of competition with national chains like Wal-Mart.
"We are delighted to be investing in such a successful company that has positioned itself as a highly respected Midwestern institution," said Stein, managing partner of Willis Stein. "Roundy's deep management team has built a loyal customer base and has led the company to an enviable position within the industry. We look forward to working with management to build upon that strength."