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Supervalu Inc. is merging with Unified Grocers in a $375 million deal that its architects say will create a company that’s “uniquely positioned to efficiently serve a broad range of independent customers and offer a diverse array of value added services, helping customers compete in an increasingly demanding grocery environment.”
Minneapolis-based wholesaler-distributor-retailer Supervalu late Monday announced the agreement, which comprises $114 million in cash for all the outstanding stock of Unified, plus the assumption and payoff of the Commerce, Calif.-based operator’s debt of some $261 million.
The transaction will bring together two highly complementary grocery wholesale organizations that had combined sales of about $16 billion in 2016.
“We’re thrilled at the opportunity to bring together these two great organizations,” said Mark Gross, Supervalu president and CEO. “By acquiring the Unified business, including gaining a wealth of expertise and talent, we will become a stronger and more efficient organization. The transaction will enhance our ability to help our customers better compete in the evolving grocery industry. We’re also excited to serve Unified’s dynamic retailer base. Unified’s members and customers operate some of the country’s most exciting and progressive Hispanic and multiple other ethnic formats, specialty, gourmet, natural/organic, price impact and traditional stores. They complement our existing customer base and we look forward to facilitating collaboration and innovation across such an impressive collection of creative merchants.”
Together, Supervalu and Unified operate 24 distribution centers supplying customers in 46 states and serve a combined customer base of more than 3,000 stores. The acquisition provides new growth opportunities across multiple geographies, including the expansion of Unified’s Market Centre division, a growing business providing specialty and ethnic products to independent customers.
“We appreciate the experience, intelligence and dedication of the Unified team, and look forward to welcoming Unified associates to Supervalu and supporting them as we continue the important work of contributing to the growth and success of our customer network and helping to deliver value to our stockholders,” Gross said. “We will make a great team together.”
Bob Link, Unified’s president and CEO, added, “We believe this transaction will benefit the members and customers of Unified Grocers as they look for new and innovative ways to serve the communities in which they operate. Supervalu and Unified share a common vision of providing best-in-class services and products to the independent grocer. The cultural fit between Supervalu and Unified well positions the combined company to pursue a shared dedication and commitment to growth and innovation, providing increased value to customers.”
Unanimously approved by each company’s board of directors, the merger is expected to close in mid- to late summer. Unified Grocers will operate as a wholly owned subsidiary of Supervalu.
The combined company “will maintain an important and visible presence” in Unified’s California headquarters and throughout the West Coast, including management and employees of the combined company, Supervalu reported.
Supervalu expects that, by the end of the third year of operations after the completion of the transaction, the combined business will achieve a run rate of at least $60 million in cost synergies.
Supervalu serves customers across the United States through a network of 2,067 stores composed of 1,850 stores operated by wholesale customers serviced primarily by the sompany’s food distribution business, 195 traditional retail grocery stores operated under five retail banners and 22 stores under the Shop 'N Save name in Maryland, Pennsylvania, Virginia and West Virginia.
Founded in 1922, Unified Grocers is a retailer-owned wholesale grocery distributor that supplies independent retailers throughout the western United States. Unifiedhas annual sales of approximately $3.8 billion and serves its members and customers through six distribution centers, as well as Market Centre, a dedicated specialty, natural and ethnic business.