Ron Watkins, president of Food Giant Supermarkets, and Jimmie Gipson, chairman of the board of Houchens Industries, announced Tuesday their boards have unanimously approved a non-binding "Letter of Intent" which outlines an exchange of stock. The transaction is contingent on several factors including an independent appraisal of the value of each company's stock and negotiation of the definitive agreement.
Both companies are wholly owned by their employees through employee stock ownership plans. Food Giant has approximately 2,500 employees with annual sales of $400 million and Houchens has approximately 8,000 employees with sales of $1.5 billion.
If approved Food Giant Supermarkets would become a wholly owned subsidiary of Houchens Industries Inc.
According to Watkins, customers would see no change in management with the transaction and the stores would continue to emphasize local operations. However, he continued, it will bring many pluses to the local stores.
"Food Giant will continue to be operated by its current management and the headquarters will remain in Sikeston. Food Giant will be in a position to take advantage of growth opportunities and expansion that are now arising in our marketplace," Watkins said.
One of the largest 100 percent employee-owned companies in the United States, Houchens is the 106th largest privately owned company in the United States, according to Forbes Magazine. It owns directly or through subsidiaries, supermarkets and convenience stores in Kentucky and Tennessee and approximately 200 limited assortment grocery stories in 13 states.
Also it is involved in recycling, insurance and warehousing, cigarette and retail fixtures manufacturing and marketing.
Food Giant owns and operates approximately 90 conventional supermarkets in eight states, primarily under the names of Food Giant and Piggly Wiggly.
Houchens' Gipson said there is great potential by the companies joining forces. "Food Giant will be a good fit with Houchens and it has the characteristics we seek in a company: good management, a strong business plan and possible synergies in our operations. This share exchange will be a benefit to the employees/owners of both companies."
The transaction is subject to approval by the boards of directors of the two companies. The target date for closing the transaction is July 3.