Fleming expands retail supply network
By David Koenig
Associated Press
Dallas-based food distributor Fleming Cos., one of the nation's largest wholesalers and Hawai'i's largest wholesale grocery distributor, said yesterday it will pay $430 million to buy two companies that supply convenience stores, including Long's Drug Stores.
Advertiser library photo • Aug. 18, 2000
Fleming said the acquisitions will make it a national distributor and boost its position in the competitive business of supplying tobacco, beverages and other impulse items to small retailers.
Fleming Companies' Hawai'i office is in Campbell Industrial Park. Fleming already supplies some 60 percent of Hawai'i groceries, and will now be adding business from convenience outlets such as Longs Drug Stores.
Fleming said it will buy San Francisco-based Core-Mark, a convenience-store distributor that had sales last year of about $3.4 billion and whose 28,000 customers include Circle K, Phillips Petroleum, EZ Mart, 7-11 franchisees, Longs Drug Stores, Albertson's and Safeway stores.
Fleming said it also will buy Georgia-based Head Distributing, which had $350 million in revenues and serves 3,000 stores.
Fleming did not break down the $430 million price for the two privately-held distributors.
Fleming said it expects the deals to more than offset a projected $900 million sales downturn, from $4.5 billion to $3.6 billion, in sales this year to Kmart, its biggest customer, struggling in bankruptcy. Fleming had 2001 sales of $15.63 billion.
"We really emerge as a business with the capacity to ship any product to any (retail) format in any location," said Fleming chairman and chief executive Mark Hansen.
Hansen said Fleming will become the second-largest distributor to small retailers at about $6 billion a year, trailing only Wal-Mart Stores Inc.'s McLane Co., at $10 billion.
Fleming said the acquisitions would add to revenue next year, which the company projected at $22 billion. Hansen said the company will offer a more detailed financial outlook when it reports first-quarter results May 7.
Fleming will add about 3,000 employees in the deals. Hansen said overlapping administration would be eliminated but said it was too early to put a number on layoffs.
Nationwide food distributor Fleming Cos. supplies 20 to 25 percent of the groceries to local stores, including Foodland, Times and Daiei.
Correction: A previous version of this story erroneously stated that Fleming supplies more than 60 percent of the groceries to local stores, including Foodland, Times and Daiei.
