After nine months of Federal Trade Commission review, the merger between Tops Markets and Price Chopper has been approved. The two upstate New York grocery chains will be overseen by a new parent company, Northeast Grocery Inc.
Scott Grimmett, who served as Price Chopper’s CEO prior to the merger, will become chief executive of the new organization and each banner will maintain its own local management team and continue with their established brand identities. Blaine Bringhurst will serve as president of Price Chopper (Market 32) and John Person will handle those duties for Tops. Northeast Grocery will operate from Price Chopper’s current headquarter facility in Schenectady, NY while Tops will continue to be based in the Buffalo suburb of Williamsville, NY. Former Tops CEO Frank Curci will now serve on the board of Northeast Grocery.
As part of the agreement, the new organization has agreed to divest 12 stores, all Tops units, located in: Cooperstown, NY; Cortland, NY; Norwich, NY; Owego, NY; Peru, NY; Rome, NY; Saranac Lake, NY; Sherrill, NY; Watertown, NY (two stores); and Rutland, VT.
Shortly after the merger announcement became official, C&S Wholesale Grocers, primary supplier to Tops (Price Chopper supplies its stores directly), said it has entered into a purchase agreement to acquire those 12 stores. The Keene, NH-based wholesaler, which in recent months has been acquiring stores for its retail portfolio and named former Stop & Shop president Mark McGowan to supervise that business sector, plans to convert the mostly rural supermarkets to its Grand Union banner, a name that C&S owns since it acquired that now defunct New Jersey-based chain in 2001. C&S plans to re-open all 12 units early next year.
The culmination of the merger will now unite two retailers that have struggled in recent years to collectively leverage their scale in a very competitive and rapidly changing marketplace with little store overlap. After the divestitures, the combined organization will operate about 30 stores under the banners of Tops, Price Chopper, Market 32 and Market Bistro. Together, the two retailers employ about 30,000 associates and have annual consolidated sales of approximately $6.2 billion.
“This merger marks a major step forward and collectively elevates our ability to compete on every level,” said Grimmett when the deal was first announced in February 2020. “It leverages increased value for our customers; advances shared opportunities for innovation; fortifies the depth of our workforce, community and trade partnerships; and ultimately accelerates our capacity to deliver a distinctively modern and convenient shopping experience. Given the vital role that supermarkets and their workforces play in our communities, particularly this past year, I am excited to lead the parent company of these two historic grocery retailers.”
“We have long believed that this merger makes sense both strategically and based on the similar ways in which we each put customers first, go to market and treat our people. We look forward to working closely with the Price Chopper/Market 32 team and together becoming an even stronger competitor with more scale, as we continue serving our customers and communities,” stated Curci nine months ago when the merger was first proposed.
As noted earlier, both regional chains have faced some hurdles in recent years.
Tops filed for Chapter 11 bankruptcy protection in February 2018, emerging nine months later with reduced debt (by about $300 million) and a more streamlined organization. As part of that reorganization, Tops renegotiated more favorable contracts from its two key labor unions – UFCW One which represents about 10,000 Tops associates at store level, and Teamsters Local 264 which represents approximately 600 warehouse workers and drivers at its distribution center in Lancaster, NY (while that facility is owned by Tops, C&S Wholesale Grocers provides distribution services to Tops’ stores).
As part of its 2018 company restructure, Tops acquired five new investors who, post-bankruptcy, controlled more than 70 percent of the company’s $560 million in secured notes. Those investors are: Silver Point Capital, a Greenwich, CT-based hedge fund which holds $157.7 million in Tops’ secured notes; HG Vora Capital, a Manhattan-based hedge fund which holds $92.2 million of secured notes; Boston-based Fidelity Management & Research, part of the huge Fidelity family of mutual funds which holds $63.8 million in secured notes; Column Park Asset Management, another Manhattan-based private equity firm which holds $50 million in Tops’ secured notes; and Signature Global Asset Management, a Toronto-based investment firm which holds $47. 8 million in secured notes. Several Wall Street sources told us that Silver Point was a key driver which pushed aggressively for the merger agreement to be consummated.
While Price Chopper did not have the same level of debt as Tops, it has previously explored the opportunity to sell its business, which was founded by brothers Bill and Ben Golub in Albany in 1932. In 2016, it issued a prospectus seeking interest in a possible sale. Albertsons reportedly was very close to a deal to acquire Price Chopper but reportedly backed away in the 11th hour. Price Chopper is a non-union retailer and slightly less than 50 percent of its privately-owned stock was controlled by its employees.
