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PARSIPPANY, N.J. - Gristedes Foods Inc. has agreed to pay $155 million to buy the upscale King Super Markets chain from its British parent company, Marks & Spencer, New Jersey's Star-Ledger reports.
Gristedes, a New York grocery chain, had an exclusive negotiating agreement with Marks & Spencer, that expired today, the newspaper reports. The deal was disclosed in a filing Gristedes made on Tuesday evening with the Securities and Exchange Commission.
The purchase price is subject to change, the filing said, because of certain severance and compensation agreements with Kings' executives that could result in a payment of between $2 million and $8 million.
The deal came 15 months after Marks & Spencer put Kings on the auction block.
Kings stores have an upscale image bolstered by offerings such as a selection of wines and freshly prepared gourmet foods. The stores also can boast of gross margins of roughly 35 percent, experts said. Kings has 25 stores in northern New Jersey and two in New York. Gristedes, and its parent Red Apple Group, operate 42 stores.
Gristedes, which had just $551,000 in cash at the beginning of March, plans to pay for the acquisition by offering $175 million of senior notes, according to the newspaper. The sale will be limited to institutional buyers and non-U.S. purchasers, the filings said.