March 19 (Reuters) - Spartan Stores Inc. (SPTN.O) said it agreed to buy certain stores and fuel centers from grocery operator G&R Felpausch Co. to expand into central Michigan.
Under the terms, Spartan Stores, which did not disclose the deal value, will buy 20 retail grocery stores, two fuel centers and three convenience stores.
The retail stores also include the operations of nine in-store pharmacies.
The grocery chain expects the deal to add to net earnings during the second year of operation, as the first year gains will be more than offset by transition expenditures of about $5 million to $6 million.
“The Felpausch stores serve many communities where we currently have no retail presence,” Spartan Stores Chief Executive Craig Sturken said in a statement.
Spartan Stores said the transaction will increase annual retail segment sales by about $200 million on completion. It expects annual consolidated sales to rise by about $100 million.
Grand Rapids, Michigan-based Spartan Stores expects the deal, which will expand its retail supermarket store base 29 percent to 88 Stores, to close late in the first quarter of 2008. (Reporting by Esha Dey in Bangalore)