Food Lion hopes to gobble up most of financially troubled rival Bi-Lo in a deal that would eliminate a major competitor from the Charleston supermarket scene.
Belgium-based Delhaize Group, which owns Food Lion, announced Monday it is in talks to buy stores and inventory for $425 million from the Mauldin-based supermarket chain.
Bi-Lo filed for bankruptcy protection in March after it was unable to refinance or repay a $260 million loan that was due.
Delhaize said Monday that it would integrate Bi-Lo stores into its Food Lion unit if the deal is approved by the U.S. Bankruptcy Court.
The two rival chains compete for shoppers in many of the same markets, including the Charleston region, where Bi-Lo has 15 stores and Food Lion has 18.
Lorrie Griffith, editor of food trade journal The Shelby Report of the Southeast, said some locations are likely to go dark as Food Lion absorbs Bi-Lo and looks at ways to cut waste and maximize its return on investment.
"What you hear from the market is they are oversaturated, as it is in most areas," Griffith said from her Gainesville, Ga., office. "There are more grocery stores than business to go around. They have some overlapping stores. Depending on how close they are, they may have to make some decisions on what to keep open."
Food Lion and Bi-Lo declined to comment on whether stores that are sold will change names or if any of locations would be closed.
"It's too early to elaborate on additional details," Food Lion spokeswoman Christy Phillips-Brown said.
"It's too early to talk about anything in the future," Bi-Lo spokeswoman Amanda Larsen said.
Delhaize said it had entered into a nonbinding letter of intent with Bi-Lo to acquire a substantial majority of the Upstate-based chain's assets. Those assets had revenue of more than $2 billion last year, according to Delhaize.
In a statement, Michael Byars, Bi-Lo's president and chief executive, said the company had signed the letter of intent, subject to conditions.
Byars added that some creditors and lenders have put forward alternative restructuring proposals.
"All options for Bi-Lo remain under consideration, and we believe it is important to carefully review our options and determine the most appropriate course of action," Byars said. "Bi-Lo remains focused on maximizing the value of the estate for the benefit of all Bi-Lo stakeholders."
Bi-Lo has been owned by Lone Star Funds, a private equity investment firm, since late 2004.
The chain operates 214 stores in South Carolina, North Carolina, Tennessee and Georgia and employs 15,500 workers. Food Lion has more than 1,300 stores in 11 states with 74,000 employees.
Their main grocery rivals in the Charleston area are Piggly Wiggly, Publix, Harris Teeter and Wal-Mart.
Walmart, which sells itself with ultra-low prices, is the leader in sales by far in South Carolina, according to The Shelby Report. Even though it has half the number of stores of Bi-Lo and Food Lion, it claims 36 percent of the market share, The Shelby Report said.
Food Lion has the most stores in the state at 145, but gets only 13 percent of the sales. Bi-Lo, with 130 stores, gets 16 percent, the report said.
It will take more than just a buyout for Food Lion to increase its sales, said Bob Goldin, executive vice president of Technomic, a food industry consultant. It will have to invest in its stores and make a better connection with the customer, he said.
"You have to make it a more pleasurable shopping experience," Goldin said.
The chain already has started working to spruce up its image in South Carolina, recently remodeling 31 stores in the Columbia and Florence regions to give the stores a "neighborhood marketplace" feel.
Kristy Eppley Ruppon of The State contributed to this report. Reach Warren Wise at 937-5524 or wwise@postand courier.com.