A private investment firm said Wednesday it is angling to bag both Andronico’s Markets and A.G. Ferrari Foods through separate purchases of the Bay Area grocery chains, which each went bankrupt this year.
Renovo Capital plans to revamp the stores operated by San Francisco-based Andronico’s and San Leandro-based A.G. Ferrari and operate them independenty.
Scott Lavie, a principal executive with Renovo, said the attraction was that “each business has a brand, a customer base and great locations.”
But they could combine some efforts. “Is it possible that A.G. Ferrari-branded items could be sold in Andronico’s stores in the future? The answer is yes,” Lavie said.
Renovo has already gotten court approval to buy A.G. Ferrari for $1.2 million and separately has proposed to pay $16 million to buy Andronico’s. The prices for the separate deals were disclosed in documents on file with the U.S. Bankruptcy Court in Oakland.
“With both companies, we hope to improve the customer experience, the product offerings and the physical facilities,” Lavie said.
Andronico’s, founded in 1929, offers gourmet and other specialty foods, along with wine, kitchen gadgets and tableware. It has four stores in Berkeley, and single stores in San Francisco, Los Altos and San Anselmo. Annual revenue is about $120 million, court papers show.
Ferrari Foods was founded in 1919 and features pastas, sauces, olive oils, vinegars and other offerings that represent items from all 20 of Italy’s food regions. Ferrari has nine stores in the Bay Area, including two in Oakland, three in San Francisco, and single stores in Berkeley, Lafayette, Los Altos and Corte Madera. Sales are running around of $9 million a year.
Andronico’s has 470 workers, including 440 at its stores. Ferrari employs 100.
Executives with both companies see a Renovo deal as the best chance to escape financial quagmires.
“The sale of the company really does create a new playing field for us,” Andronico’s chief executive, Bill Andronico, said in an interview with this paper recently.
A.G. Ferrari contacted 72 organizations or individuals in a quest for buyers. Only Renovo emerged with a “bona fide proposal,” Patricia Saucy, Ferrari’s chief financial officer, told the court.
“This company has little or no value if it were to be shut down and liquidated,” Eric Nyberg, a bankruptcy attorney for Ferrari Foods, said during a court hearing Sept. 8. “A.G. Ferrari has strategic value to the buyer as a going concern.”
Renovo Capital was formed in 2008 to invest in companies that are distressed or represent special situations. Renovo typically invests $5 million to $15 million per transaction. It has bought four companies, in consumer products, automotive and building products industries, Mark Barbeau, a Renovo principal executive, said in court papers.
A.G. Ferrari’s sale to Renovo is scheduled to close soon. A bankruptcy judge has already approved the deal.An auction for Andronico’s is scheduled for Oct. 13.
“We are the highly likely buyer for A.G. Ferrari,” Lavie said. “With Andronico’s, our offer is subject to higher and better offers.”
The potential deals and upgrades of Andronico’s and Ferrari come at a time that the Bay Area’s grocery wars have intensified.
“They face an uphill battle with the competition that is coming in,” said Robert Reynolds, a Moraga-based retail consultant. “It will take a significant investment to upgrade the stores and get the inventories to where they need to be.”
Safeway has launched revamps or new stores in the Bay Area. Fresh & Easy, Whole Foods, Sunflower Farmers Market, Foods Co. and Sprouts Farmers Market also pose challenges.
“We hope that the improvements we plan with both companies will continue generations of tradition of these two brands providing grocery and delicatessen services to Bay Area residents,” Lavie said.
Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.
