Winn-Dixie (NYSE:WINN) shares are surging today after the grocery store chain announced it has agreed to merge with BI-LO.
BI-LO will acquire all outstanding shares of Winn-Dixie stock for $9.50 per share, a 75% premium over the closing price Friday.
Winn-Dixie's board has approved the deal and recommends shareholders vote in favor of the transaction.
BI-LO chairman Randall Onstead said the combined company will have a perfect geographic fit, with no overlap in the current markets, that will create a stronger platform while offering exceptional service.
The transaction is expected to close in the next 60 to 120 days.
BI-Lo currently operates 207 stores in North Carolina, South Carolina, Georgia and Tennessee, and Winn-Dixie operates 480 stores in Florida, Alabama, Louisiana, Georgia and Mississippi.
The combined company will potentially pose a greater threat to Wal-Mart (NYSE:WMT), which operates heavily in those states, in addition to posing a threat to other publicly traded grocery stores like Kroger (NYSE:KR), Safeway (SWY) and Supervalu (SVU), if the company expands into their territories.
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