Milwaukee-based Roundy’s, Inc. has sold 18 of its Rainbow stores to a group of local grocery retailers for $65 million in cash, plus inventory proceeds.
The stores are all in the Minneapolis/St. Paul market. The buyers include Eden Prairie, Minn.-based Supervalu Inc. The group will assume lease obligations and certain “multi-employer pension liabilities” for the stores.
This transaction, which is expected to close in the third quarter, leaves Roundy’s with nine remaining Rainbow stores, which it plans to sell or close and then exit the Minneapolis/St. Paul market. Roundy’s will use the proceeds to pay down debt.
“The economic downturn over the last few years, coupled with an increased competitive footprint in the Minneapolis/St. Paul market, has made it difficult for Roundy’s to keep the Rainbow banner competitive,” said Robert Mariano, Roundy’s chairman, president and chief executive officer. “However, we believe the sale of these Rainbow stores to this group of local operators will provide those stores better stewardship in serving their communities in the Minneapolis/St. Paul market going forward. The transaction will also allow us to better focus strategically on growing our Mariano’s banner in the Chicago market and strengthening our business in our core Wisconsin markets.”
Roundy’s plans to discuss its first quarter financial results during a conference call at 3:30 p.m. today.