Consolidated Stores Corp. said Wednesday it will buy Mac Frugal’s Bargain Close-Outs Inc. for as much as $995 million in stock to create a nationwide chain of stores that sell goods at rock-bottom prices.
The purchase will expand the Wilmington-based operator of the Odd Lots and Big Lots chains into the West, where Mac Frugal’s dominates the closeout retail business with its Pic `N’ Save and Mac Frugal’s stores.
Consolidated, the No. 1 bargain-basement chain with 1,940 stores, told analysts the 325-store No. 2 chain, based in Dominguez, Calif., will add to earnings next year.
“If you can gain additional efficiencies, it lowers selling, general and administrative expenses, which increases earnings,” said John Cabell, a portfolio manager at USAA Investment Management. “I’m surprised somebody else hasn’t done this before.”
