Morgan in $310m supermarket deal

Morgan Stanley will buy US supermarket chain Tops for $310 million. The deal is the US investment bank’s second since re-launching its private equity division last year.

Morgan Stanley Private Equity has moved into the supermarket sector with an agreement to acquire Tops Markets from international supermarket operator Royal Ahold for $310 million (€218 million). The deal is expected to close before the end of the year.

Ahold acquired Tops in 1991, and expanded the business outside of its original base in Buffalo, New York. Tops now runs 71 company-owned and five franchise supermarket grocery stores in New York and Pennsylvania.

In conjunction with the deal’s close, former Ahold executive Frank Curci will join the company’s board of directors and lead the ownership transition. Curci was previously Tops’ chief executive from 2000 to 2003, but in May 2003 Curci resigned from Ahold after an audit revealed accounting irregularities at Tops for the year 2002.

“We have come to know Frank Curci well and appreciate his vast knowledge of the supermarket industry and his familiarity with the Tops organization,” Morgan Stanley managing director David Smoot said in a statement.

The deal is Morgan Stanley’s second since it re-launched its private equity business last year and continues to bolster staff in the US, Europe and Asia. The firm spun out its in-house private equity division as Metalmark Capital three years ago, but decided to be re-enter the industry following the bank’s leadership change from former chief executive Phillip Purcell to current CEO John Mack. Last year Alan Jones and Goldman Sachs’ Stephen Trevor were tapped to lead the new private equity division, and earlier this month the group began publicly using a new name to differentiate itself from its predecessor, Morgan Stanley Capital Partners.

Morgan Stanley Private Equity is currently raising a $6 billion global fund, to which sources say the bank has already committed $2 billion. It completed one other deal earlier this year, which the firm described as the acquisition of an aerospace company.