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    Gelson’s Parent to Be Acquired by TPG

    All-cash deal expected to close early next year; chain set to expand

    Arden Group Inc., parent company of Southern California specialty grocery chain Gelson’s Markets, has entered into a definitive agreement to be acquired by global private investment firm TPG in an all-cash transaction valued at about $394 million.

    Under the agreement, Arden’s shareholders will get $126.50 per share in cash for each share of the company’s common stock they hold, representing premiums of about 26 percent and 14 percent to Arden’s average closing stock prices for the periods ended six months and one day, respectively, before the company revealed this past July 15 that it was considering strategic alternatives, including a potential sale of the company.

    The agreement comes after a comprehensive process in which Arden, aided by its financial advisor, Moelis & Co. LLC, gauged interest in a potential acquisition of the company. Members of the company’s board of directors approved the merger.

    'Significant Value'

    According to Bernard Briskin, chairman, president and CEO of Los Angeles-based Arden, the agreement “delivers significant value to our shareholders. In addition, it is a clear endorsement of Gelson’s Markets and of the hard work and commitment of our employees with whom I have had the privilege to work with for more than 40 years.”

    “TPG is a world-class private investment firm and has a strong understanding and appreciation for our brand and our dedication to superior customer service,” added Rob McDougall, the chain’s president. “Gelson’s will continue to provide the highest levels of service to our customers at our same current locations, while looking to offer a remarkable shopping experience in other areas of Southern California.”

    “Gelson’s Markets is an iconic Southern California supermarket chain that prides itself on offering quality and unmatched customer service,” said TPG Partner Carrie Wheeler, noting that the firm would be “working with the team to further expand Gelson’s footprint of premier supermarkets.” The chain currently operates 17 stores.

    Expected to close in the first quarter of 2014, the deal is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. There’s no financing contingency.

    Reed Smith LLP was outside counsel to Arden, while BMO Capital Markets acted as financial advisor to TPG, and Ropes & Gray LLP was the firm’s outside counsel.

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