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Grocery Outlet to acquire 40-store United Grocery Outlet

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Grocery Outlet plans to open 15 to 20 stores in existing markets in 2024.

Grocery Outlet Holding Corp. is expanding its footprint into new markets in the Southeast.

The extreme discount grocer has agreed to acquire closeout grocery retailer United Grocery Outlet (UGO) from affiliates of Gen Cap America and current and former UGO management. With 40 stores and a distribution center, the acquisition of UGO will expand Grocery Outlet's presence into Tennessee, North Carolina, Georgia, Alabama, Kentucky and Virginia. 

According to a regulatory filing, Grocery Outlet will pay $62 million in cash to acquire the company. 

In addition to the newly acquired UGO stores, Grocery Outlet plans to open 15 to 20 stores in existing markets in 2024, for a total of 55 to 60 net new stores this year

"United Grocery Outlet is a natural fit given our similar opportunistic buying strategies, customer value propositions, and shared mission of serving our communities,” said RJ Sheedy, president and CEO, Grocery Outlet. “This acquisition provides Grocery Outlet with scale in a new region as well as a platform for future expansion in the Southeast. We are excited to welcome the United Grocery Outlet team into the GO family, and we look forward to working together on the many growth opportunities ahead."

The deal is anticipated to close early in the second quarter, subject to customary closing conditions. The acquisition is expected to be modestly accretive to the company's 2024 earnings

Emeryville, Calif.-based Grocery Outlet is a high-growth, extreme value retailer of name-brand consumables and fresh products sold through a network of independently operated stores. It has more than 460 stores in California, Washington, Oregon, Pennsylvania, Idaho, Nevada, Maryland, New Jersey and Ohio.

Based in Tennessee, United Grocery Outlet is a closeout grocery retailer with 40 stores in Tennessee, North Carolina, Georgia, Alabama, Kentucky and Virginia.

BofA Securities acted as exclusive financial advisor and Honigman LLP and Gould & Ratner LLP acted as legal advisors to Grocery Outlet. Stout acted as financial advisor and Bass, Berry & Sims PLC acted as legal advisor to Gen Cap and United Grocery Outlet.

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