After several years of searching for a buyer, New York-based private equity firms Angelo, Gordon & Co. and MTN Capital Partners LLC have sold their retail food subsidiary Kings Super Markets, Inc. and Balducci’s Food Lover’s Markets.
The buyer is technically self-created KB Holding, Inc. (Kings Balducci’s Holding), a Delaware-based investment firm. However, the deal was financed by GSSG Capital (Ghanim Bin Saad Al Saad & Sons Group), one of the largest privately-held businesses in the Middle East nation of Qatar. This will be GSSG’s first U.S. investment, and sources at Kings/Balducci’s were excited that the new owners will actually bring new investment capital to the table.
Angelo, Gordon acquired Kings in 2006 from Marks & Spencer for $61.5 million and it wasn’t long after that the Manhattan-based investment firm began leveraging Kings’ valuable properties, primarily in New Jersey. AG managed its investment like a typical private equity firm, utilizing Kings’ real estate portfolio and cash flow to serve its needs, but in its decade-long ownership failed to significantly expand the Kings/Balducci’s store base. Over the past three years, AG’s focus seemed much more on an exit strategy than on improving market share.
The terms of the transaction were not disclosed, but industry analysts estimated that the whole lot of 34 stores fetched between $35-40 million (not including debt).
Kings and Balducci’s will continue to be managed locally with Judy Spires remaining as chairman and CEO and Rich Durante as president. In fact, we were told that the entire management team will remain intact at both companies, which maintains headquarters in Parsippany, NJ (Kings) and Rockville, MD (Balducci’s).
Spires joined Kings/Balducci’s as chief executive in 2010 after a long career at Acme Markets. Last year she was also named chairman. Durante began his career with the company as a store manager in 1988. He was promoted to COO in 2013 and added the title of president in 2015.
“We believe this will be a great partnership for Kings and Balducci’s that will create significant opportunities for our business going forward,” said Spires.
“This investment will lay the foundation for expansion now and into the future,” Durante added.
The deal includes 25 Kings stores in Connecticut, New Jersey and New York, as well as six Balducci’s stores in Connecticut, New York, Maryland and Virginia, two Balducci’s Gourmet On The Go locations (New York City and Baltimore) and a Balducci’s Express at New York’s JFK Airport.
For many years, Kings, which was founded by Joe Bildner in Summit, NJ in 1936, was considered one of the best upscale independent retailers in the country. That began to change in 1988, when the Joe’s son Allen sold the company to British merchant Marks & Spencer, best known for owning Brooks Brothers. By the time Angelo, Gordon bought the company in 2006, Kings had lost much of its cachet. While there has been some improvement since those dark days, there has been little new store growth while other retailers seeking to attract the prototypical Kings customer have created a much more competitive environment.
Balducci’s has also had a record of ownership changes and limited growth. Founded in Brooklyn in 1916 by Louis Balducci, the one-store retailer subsequently relocated to Greenwich Village in Manhattan (where it became an institution) before being sold to Sutton Place Gourmet, a Washington, DC based gourmet retailer in 1999. Bear Stearns Merchant Banking Group acquired Sutton Place in 2003 before Angelo, Gordon added Balducci’s to its portfolio in 2009.
According to our data, Kings Food Markets and Balducci’s (excluding Balducci’s On The Go and Balducci’s Express) had estimated sales of $612.4 million at 31 locations.
