ShareThis Page
Business

Analysts predict Giant Eagle expansion

| Saturday, Dec. 17, 2005

Giant Eagle's reputation as an industry innovator could move farther westward should the O'Hara-based grocer pursue Marsh Supermarkets.

Indianapolis-based Marsh announced in late November it had hired Merrill Lynch & Co. "to explore strategic alternatives" including a possible sale. Its stock is down some 30 percent in five years. Calls to Indianapolis for comment were not returned.

It wouldn't be a stretch for Western Pennsylvania's dominant grocer to move farther west from its 15-store Columbus and 44-store Cleveland strongholds.

If Giant Eagle sees it can turn around Marsh's lackluster string of quarterly results -- and pay roughly $400 million plus inventory -- a deal is possible, according to one analyst.

"It would be a bit of a reach, but Giant Eagle has a history of buying family-owned, broken operations that look too broken to be fixed," said Burt Flickinger III, managing director of Strategic Resource Group, New York. "Giant Eagle is the best family owner-operator of unionized stores in the country, and Marsh has had some union challenges."

Flickinger said Giant Eagle has had great success negotiating with its unions, including the Teamsters, meat cutters and bakers because it has managed over the years to add union jobs at its stores.

"Giant Eagle continues to examine opportunities for strategic growth but has nothing to publicly disclose on this matter at this time," said Giant Eagle spokesman Rob Borella.

"There is a scenario out there that the remaining strong regional chains get bigger by buying other chains," said Neil Stern, a retail consultant in Chicago with McMillan/Doolittle LLP. "Geographically, they are close enough to do a deal, and Giant Eagle has the resources to do it."

A public company since 1953, Marsh's executive roster includes some nine members named Marsh. Many analysts and industry watchers believe the company, like privately held Giant Eagle, still operates like a family-run business.

Industry watchers said Marsh also is caught in the crossfire between Wal-Mart which, as is the case in Western Pennsylvania, is putting a tremendous press on the Midwest with its Supercenters; Meijer, a Grand Rapids, Mich.-based chain of 170 supercenters; and traditional grocer Kroger.

Flickinger said Marsh is highly motivated to do a deal, as every month it waits, the greater the pressure builds on its profit outlook.

Additional Information:

Details

Marsh Supermarkets at a glance

Founded: 1931.

Headquarters: Indianapolis.

Chief executive: Don Marsh, son of founder Ermal Marsh.

Sales: Year ending April 2: $1.7 billion.

Net income: $4.2 million.

Total stores: 279.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me