While speculation swirled this summer that Ukrop’s was looking to sell, and seemingly everyone and their grandmother had a tip, Derek Lewis knew what was going down.
He was working behind the scenes, trying to put a deal together.
As of last week, it looks like it finally happened.
Lewis was part of a team at the locally based Harris Williams & Company middle market investment bank that served as adviser for the Ukrop family as they explored their exit strategy.
Lewis was joined by Chris Williams and John Klim in the day-to-day negotiations.
While more details are likely to emerge as the dust settles, Lewis talked with BizSense about some of the finer aspects of the deal.
Below is an edited transcript.
Richmond BizSense: How long did the deal take to put together? Who was involved?
Derek Lewis: It was several months from beginning to end. We went to a small group of strategic buyers the Ukrop family thought would highly value the business, would care about the company and the associates. The Ukrops obviously wanted to pass it on to a company who really cared about the community, the employees and customers. Giant/Martin’s checked all three of those boxes.
RBS: Is the decision to rehire store employees and delay the name change a part of the terms and conditions of the deal? As well as waiting to sell alcohol and open on Sundays?
DL: I wouldn’t say that they are conditions. Giant/Martin’s is going to hire the store associates because they realize what made Ukrop’s special is its commitment to service. To have that continuity of the stores was a really important aspect. Giant/Martin’s is still deciding about the name and how that is going to work in the long term.
RBS: Did negotiations primarily take place with the Giant-Carlisle subsidiary or with the Dutch parent company Royal Ahold?
DL: It was both. Day-to-day conversations were with Giant-Carlisle, but there were people throughout the process in the Netherlands following it very closely.
RBS: In a disclosure statement filed by Ukrop’s with the Office of Thrift Supervision (which oversees First Market Bank), the company reported it had debts of $81.7 million. Was that debt assumed by Giant as part of the deal?
DL: Giant did not assume the debt. It’s up to the Ukrops how they want to handle that.
RBS: What were the most important aspects of the deal for Giant?
DL: For Giant, one of the most important aspects was that Ukrop’s and the family continue to own and run the prepared foods and bakery business. Ahold in Europe has a long history and tradition of working with partners for prepared foods and baked goods. When they learned about this business and how different Ukrop’s was, they saw it as a competitive differentiator.
RBS: Is the supplier relationship with Giant exclusive?
DL: Ukrop’s branded products will only be offered in Giant/Martin’s.
RBS: Why was the timing right for both companies to do this now?
DL: From the Ukrops’ perspective, they have seen over the last decade the grocery retail business has changed dramatically; there have been a lot of new entrants in the Richmond market. One thing they came to realize, as a small independent, from a pricing standpoint they thought it was time to sell the business so the stores could continue to be in the Richmond market but have the banking of a large global company like Ahold.
From Giant’s standpoint, Ahold is very focused on growing their business in North America and has been actively looking for acquisitions. The company had a lot of cash on its balance sheet and looking to use that cash to build platforms in the U.S.
RBS: How do you feel this deal will affect the Richmond community?
DL: I think it is really excited. The Richmond community will continue to have all the great benefits. Ukrop’s will still be here in terms of the food products and bakery. Going forward, we will all enjoy lower prices. It is really a win-win for the Richmond market.
Al Harris is a BizSense reporter. Look for more in-depth Ukrop’s coverage this week. And please send news tips to
Al@richmondbizsense.com.
Great coverage Al.
Had the reporter been awake, he should have asked “with the Ukrops vehemently denying publicly for months that the chain wasn’t being shopped, hasn’t the squeaky clean image of these blatant liars irreparably hurt the brand?”
Bravo to the Ukrop family. They built a business the old fashioned way. Through Hard Work and Working Smartly.
They recognized that changes in the food retailing industry were stressing their ability to hold margins and remain profitable, while offering the level of service they want to provide. Obviously, they have worked hard and smart to earn profit. They deserve it.
I have not been a Ukrops shopper. Kroger in Carytown is where I like to shop. However, Ukrops deserves everyone’s gratitude for their success and service to the community.
Too bad no one has seemed to mentioned the 150 employees at the corporate office and others at other locations that will be losing their jobs come February. Guess that’s less important than making sure white house rolls will still be sold by the family.