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    Fleming Drives Growth with Transactions in Southwest

    Fleming on Tuesday announced that it has completed the series of transactions that places former Furrs Supermarkets locations into the hands of new retail operators and creates approximately $175 million in distribution revenue for its Lubbock, Texas distribution facility.

    Fleming on Tuesday announced that it has completed the series of transactions that places former Furrs Supermarkets locations into the hands of new retail operators and creates approximately $175 million in distribution revenue for its Lubbock, Texas distribution facility. In total, Fleming facilitated the purchase of 36 stores located in the Albuquerque and Las Cruces, New Mexico and El Paso, Texas markets by a variety of independent and chain food store operators. Furrs has closed the remaining 30 locations that were not selected by buyers. In a separate transaction, Fleming finalized the acquisition of five Smith's Food & Drug Stores in El Paso and Las Cruces that will be operated by Fleming as price-impact stores under the Rainbow banner. In total, the transactions will generate approximately $175 million in combined distribution revenue for Fleming.

    "This is an extremely innovative transaction and, more importantly, it is representative of the growth opportunities we see nationwide," said Mark Hansen, chairman of the board and CEO of Fleming. "By facilitating the sale of the Furrs stores to a group of outstanding existing and new customers, we provided a powerful growth vehicle - by our estimates, approximately $125 million per year -- to our Lubbock operations. Additionally, through our purchase of the five Smith's Food & Drug Stores, we will quickly gain entry into the El Paso and Las Cruces markets for our price-impact stores while adding an incremental $50 million in volume for our Lubbock distribution center. And finally, through careful analysis of the Furrs store locations and potential buyers, we identified the retailers who were eager buyers of key locations and helped drive our return on invested capital."

    After the purchases by chain and independent store buyers as well as savings related to the elimination of construction costs for its price-impact stores in the El Paso and Las Cruces markets, Fleming believes its net investment in the transactions is approximately $39 million, with an expected cash-on-cash return on its investment of approximately 30 percent.

    "Fleming is pleased to offer this growth opportunity for independent retail customers," said Steve Davis, Executive Vice President and President, Wholesale. "We appreciate their business and are happy to serve these successful supermarket retailers with these additional store locations. We are confident that consumers in these communities will be pleased with the local ownership and customer focus provided by these quality retailers."

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