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Village Pantry chain adds 33 Next Door Stores, puts new management team in place

INDIANAPOLIS -- The third quarter of 2007 was a busy one for the Village Pantry convenience store chain, with a mostly new management team coming on board and its first acquisition since being spun off as an independent company from former parent Marsh Supermarkets.

Over the last 90 days, a lot has happened, president and CEO Mick Parker told CSP Daily News. Specific to the acquisition, he added, This is part of our new Village Pantry growth strategy. We are very actively in the growth mode, both from an acquisition [and new-construction] standpointbut [image-nocss] we are very active on the acquisition front.

As reported in a CSP Daily News Flash yesterday, Village Pantry Inc., an affiliate of Sun Capital Partners Inc., acquired the business of Imperial Co. Inc., Mt. Pleasant, Mich. Imperial operates 33 Next Door Store c-stores in Michigan and northern Indiana and sells premium-branded fuel to complement its convenient products, quick-serve restaurants, car washes and other value-added service offerings. Terms of the acquisition were not disclosed.

We are delighted to be adding the Next Door Store convenience stores to the Village Pantry portfolio of convenience stores to augment our footprint in two Midwestern states, Parker said in a press release. We expect to take advantage of the economies of scale offered by this transaction and be better positioned to enhance the value proposition for our loyal customers. The transaction will also provide increased opportunities for growth and the continued rollout of new merchandising concepts.

Indianapolis-based Village Pantry, formerly a sister company of Marsh Supermarkets before it was spun off by Sun Capital this past May, operates 146 convenience stores throughout Indiana and Ohio providing a broad selection of grocery, deli and bakery items.

For David C. Johnson, president of Imperial Co. Inc., selling to Village Pantry was a great fit.

This is a great opportunity for the Imperial Co./Next Door Store concept to join with Village Pantry, a company that shares our commitment to service and to our customers and associates, he said in a statement. Both companies share a similar operating philosophy and have no location overlap. It is a great fit for both organizations.

And the growth isn't over for Village Pantry, according to Parker.

Initially, we have more of a fill-in strategy, but we're not ruling out anything from a geographic perspective assuming that it makes logical sense from an operational standpoint, he said. Hopefully there will be many more [purchases to announce] in the not too distant future. We're working diligently, [and] we're very confident that there will be other opportunities in the very near future.

This came literally a day after Parker, who came to Village Pantry from Circle K Southeast in May, solidified his new management team, which includes former Circle K and Starbucks executives, as well as a couple holdovers from the Marsh/Village Pantry days:

Mick Parker, president and CEO (formerly with Circle K)

Mike Ross, vice president of merchandising and fuel (formerly with Circle K)

Stephen Larkin, vice president of store development/real estate (formerly with Starbucks)

Chris Noll, vice president of construction engineering (formerly with Circle K)

Steve May, CFO (formerly with Marsh)

Mike Emmons, director of operations (Village Pantry)

Sun Capital's objective is for us to build value in the Village Pantry organization, he said. I've brought on basically a whole new management team [to do that].

It's an interesting change from 18 months ago, when most analysts were predicting Sun Capital would sell off the Village Pantry assetsthe most lucrative in the Marsh portfolioas quickly as possible to capitalize on their marketability. Since then, however, Sun Capital leaders have come to view the acquisition of Village Pantry as a happy accident.

I don't think you can view our acquisition of Marsh as an acquisition of Village Pantry, Richard Hurwitz, vice president of Sun Capital, told CSP Daily News. It just happened to be there, and we found that it was a wonderful business.

Thus, Hurwitz said Sun Capital is now keeping a much closer eye on the c-store industry. We'd clearly be interested in acquiring more convenience stores, Hurwitz said. We wouldn't be looking at one-off deals. Our investment strategy is to buy underperforming companies and turn them around. Half of the companies we buy have negative EBITDA. It could be anywhere in the U.S. or Canada.

Boca Raton, Fla.-based Sun Capital Partners Inc. is a private investment firm focused on leveraged buyouts, equity and other investments in market-leading companies that can benefit from its in-house operating professionals and experience.

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