Smart & Final to purchase 28 Haggen store leases

Commerce, Calif.-based Smart & Final Stores Inc. said that its subsidiary, Smart & Final Stores LLC, entered into an agreement to acquire 28 store leases and related assets from affiliates of Haggen Holdings LLC, Bellingham, Wash., for a cash purchase price of $56 million, subject to certain adjustments. The company agreed to be a "stalking horse bidder" in a court-supervised sale of certain of Haggen's assets and will be entitled to certain breakup fees and expense reimbursement should an alternate higher bid ultimately be approved.

If Smart & Final is approved as the successful bidder in the auction for Haggen's assets, the transaction is expected to close during the company's fiscal fourth quarter 2015, subject to bankruptcy court and other customary approvals, Smart & Final said.

If completed, the transaction will result in Smart & Final assuming the leases and acquiring certain associated assets of 27 closed stores in central and Southern California and one closed store in Las Vegas, which most recently were operated as "Haggen" banner stores. The retailer said it plans to convert these stores to its Smart & Final Extra! store format, and would invest in store fixtures and equipment, decor and signage, and infrastructure upgrades. It intends to fund the transaction and related investment from existing cash and availability under credit facilities.

The timing of the conversion process will vary on a store-by-store basis and is expected to start during Smart & Final’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, the retailer said.