NEW YORK — A group of investors purchasing Household Merchandising Inc. for $700 million will sell its TG&Y Stores Co. unit to Rapid-American Corp., the parties said Thursday.
The purchase price was not disclosed.
Household Merchandising is a subsidiary of Household International Corp. of Chicago, which is in the process of selling it in a leveraged buy-out to a group of investors led by the New York brokerage firm Donaldson, Lufkin & Jenrette.
In a leveraged buy-out, the buyers borrow money to make the purchase and repay it with the acquired company's earnings or the sale of its assets.
Besides TG&Y, Household Merchandising units include 176 Vons supermarkets in California and Nevada, 1,629 Ben Franklin variety stores and 1,079 Coast-to-Coast hardware stores.
Rapid-American is a New York-based concern with interests in apparel, retailing and alcoholic beverages.
Variety Store Subsidiary
It said TG&Y, an Oklahoma City-based chain of 739 stores, which has annual revenue of $2 billion, will become part of its variety store subsidiary, McCrory Corp.
McCrory, which now operates 748 variety stores, had revenue of $918 million in the fiscal year ended Jan. 31, 1985, Rapid-American said.
The announcement said TG&Y will operate as a separate entity.
Rapid-American said the acquisition was expected to be completed by early next month.
Peter Grauer, who heads the Household Merchandising buy-out for Donaldson, Lufkin & Jenrette, and Richard Pehlke, spokesman for Household International, confirmed the deal, but they also declined to reveal the purchase price for TG&Y.