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Gelson’s, Smart & Final Plan To Buy 36 Haggen Stores

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Southern California-based grocery chains Gelson’s Markets and Smart & Final hope to purchase 36 Haggen stores.

Gelson’s plans to buy eight California stores, at El Camino Real in Carlsbad; Via De La Valle in Del Mar; Crown Valley Parkway in Ladera Ranch; South Pacific Coast Highway in Laguna Beach; Turquoise Street in San Diego; Bob Hope Drive in Rancho Mirage; Lincoln Boulevard in Santa Monica; and Avenida De Los Arboles in Thousand Oaks.

Smart & Final plans to buy 27 California stores and one Nevada store, for a cash purchase price of $56 million, at El Camino Real in Atascadero; El Camino Real in Carlsbad; Linden Avenue in Carpinteria; Chino Hills Parkway in Chino Hills; East H Street in Chula Vista; Coast Highway in Corona Del Mar; B Avenue in Coronado; Camino Canada in El Cajon; Fletcher Parkway in El Cajon; Avocado Avenue in La Mesa; Newbury Road in Newbury Park; W. Avenue North in Palmdale; Creston Road in Paso Robles; N. Pacific Coast Highway in Redondo Beach; Tierra Santa Boulevard in San Diego; Westview Parkway in San Diego; Johnson Avenue in San Luis Obispo; W. 25th Street in San Pedro; W. San Ysidro Boulevard in San Ysidro; State Street in Santa Barbara; Magnolia Avenue in Santee; Los Angeles Avenue in Simi Valley; Hawthorne Boulevard in Torrance; Plano Trabuco Road in Trabuco Canyon; Telegraph Road in Ventura; Lindero Canyon Road in Westlake Village; Yorba Linda Boulevard in Yorba Linda; and Village Center Circle in Las Vegas.

Haggen made the announcement in the early morning hours (Eastern time) Monday, saying it had filed motions to approve two separate asset purchase agreements for the stalking horse bidder packages from Gelson’s and Smart & Final. Both agreements are subject to bankruptcy court approval.

Gelson’s has not made its plans publicly known, but Smart & Final said Monday that, if the transaction to acquire the 28 store leases is completed, it plans to convert the stores to its Smart & Final Extra! store format, including investment in store fixtures and equipment, decor and signage and infrastructure upgrades.

Smart & Final says the timing of the conversion process will vary on a store-by-store basis and is expected to start during the company’s fiscal fourth quarter of 2015 and to be completed during the company’s second quarter of 2016. The newly converted Extra! stores will reflect Smart & Final’s distinctive operational footprint and store layout as well as unique, high-quality merchandise offering tailored to both household and business customers, according to the company.

Smart & Final, headquartered in Commerce, currently operates 270 stores under the Smart & Final, Smart & Final Extra! and Cash & Carry Smart Foodservice banners in California, Oregon, Washington, Arizona, Nevada and Idaho, with an additional 16 stores in northern Mexico operated through a joint venture.

Gelson’s, a specialty grocer based in Encino, currently operates 18 stores in Southern California, with another expected to open in Rancho Mission Viejo in late 2016.

Additionally, on Monday, Haggen said it had filed motions with and is seeking the approval of the bankruptcy court to establish procedures for ongoing sales. The motions present global bidding procedures, stalking horse package bid procedures and a schedule of stores being sold.

Haggen is seeking a court hearing on Oct. 19 to hear the company’s proposed global bid procedures. Parties interested in participating in the sale of stores need to submit an indication of interest by no later than Oct. 26. The procedures provide for a deadline for submission of bids to purchase some or all of the assets at 5 p.m. (Eastern time) Nov. 2, with an auction scheduled on Nov. 9. The hearing to consider the results of the auction will be held Nov. 24. In the event no auction is conducted for a stalking horse package or if one of the stalking horse bidders is the successful bidder for its package after the auction and the contracts identified in the original bid have not changed, a sale hearing for those stores will be held Nov. 13 instead. All dates are tentative and subject to bankruptcy court approval.

Haggen previously requested approval to begin going-out-of-business sales in the identified non-core locations and will exit operations in its Pacific Southwest Division during the last weeks of November. The sale process has been designed to be fair and transparent in order to derive the highest bid for the stores and to maximize value for the estate and creditors in an orderly process, according to Haggen. The procedures will allow the sale auction(s) to be conducted in a controlled, fair and open fashion that will encourage participation of financially capable buyers, the company says.

As The Shelby Report has reported, Bellingham, Washington-based Haggen created its Pacific Southwest Division earlier this year following its purchase of 146 former Albertsons and Safeway stores in Southern California, Arizona and Nevada. The purchase took the chain from 18 stores to 164. Following an unsuccessful entry into the marketplace, Haggen filed for Chapter 11 bankruptcy and since has said it will refocus on its “core” operations in the Pacific Northwest.

About the author

Kristen Cloud

A former newspaper editor and publisher who has handled digital duties for The Shelby Report since 2011. She once enjoyed leisurely perusing the grocery store aisles but, since having a baby in 2016, is now an enthusiastic click-and-collect shopper.

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