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    The Pantry Completes Ahold Deal

    Acquisition of Golden Gallon convenience stores valued at $187 million.

    SANFORD, N.C. -- The Pantry Inc. has completed its $187-million acquisition of 138 Golden Gallon convenience stores from Ahold USA Inc.

    Golden Gallon, with $387 million in revenue, operates 90 stores in Tennessee and 48 stores in northwest Georgia. This acquisition brings The Pantry chain to a combined total of 1,395 stores operating in 10 states in the southeastern United States.

    "The Golden Gallon acquisition is another critical step in The Pantry's strategy of developing the premier southeastern convenience store chain with excellent geographic density and outstanding store facilities and locations," said Pete Sodini, president and CEO of the Sanford, N.C.-based chain. "We are excited about this opportunity because Golden Gallon is a well-established chain of stores in the greater Chattanooga, Tenn., market that is an excellent strategic fit for The Pantry with our existing 14 stores in the Nashville, Tenn., market and 56 stores in the Gainesville, Ga., market.

    "Further, the Golden Gallon stores are attractive, high-volume stores with a good mix of interstate and residential locations. The combined concentration of stores in the Tennessee and Georgia market provides us the opportunity to capitalize on synergies of the combined group."

    The entire purchase consisted of 138 operating stores, of which 131 are fee-owned stores, a dairy plant, a fuel hauling operation, corporate headquarters buildings and 25 undeveloped sites.

    With experience gained in prior acquisitions, The Pantry is "well into the integration phase of this transaction," Sodini said. "We immediately integrated all store operating systems on day one. Our training of the store and field operations personnel was completed prior to the closing and they have been added to our existing regional management structure."

    The Pantry structured the acquisition as two simultaneous transactions whereby the real estate was purchased and financed through a $94.5-million sale/leaseback transaction for 114 of the fee-owned stores, while the Golden Gallon operations and the balance of the real-estate assets were acquired for about $92.5 million.

    The Pantry funded the second portion of the transaction with $80 million of debt through an add-on to the company's existing first lien loans and available cash of the company. At the closing, The Pantry sold the dairy plant to National Dairy Holdings and the fuel hauling assets to Eagle Transport, both of which are existing suppliers to The Pantry.

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