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    Marsh, Sun Cap Ink Buyout Pact

    INDIANOPOLIS -- Nearly six months after revealing it was exploring strategic alternatives that included a sale, the exploring seems to be officially over for Marsh Supermarkets, Inc. here. The regional retailer said yesterday signed an agreement for an $11.125 per share cash takeover by an affiliate of Sun Capital Partners Inc.

    INDIANOPOLIS -- Nearly six months after revealing it was exploring strategic alternatives that included a sale, the exploring seems to be officially over for Marsh Supermarkets, Inc. here. The regional retailer said yesterday signed an agreement for an $11.125 per share cash takeover by an affiliate of Sun Capital Partners Inc.

    The definitive agreement follows on the heels of an "exclusivity agreement" Marsh signed with Sun Capital last month, in which the chain agreed not to negotiate with other parties or solicit alternative transactions before May 11. Marsh management said it expects the $88 million cash deal, which has no financing contingency, to close in the third quarter of 2006.

    Sun Capital is a leading private investment firm specializing in leveraged buyouts of market-leading companies.

    Marsh said its board approved the transaction upon the recommendation of a special committee of disinterested and independent directors. Merrill Lynch & Co. served as financial advisor. The transaction is subject to customary closing conditions and shareholder and regulatory approvals.

    "We have conducted a thorough process of analyzing strategic alternatives and are pleased to move forward with an affiliate of Sun Capital Partners," Don E. Marsh, chairman and c.e.o., said. "Sun Capital's financial resources and deep retail operating experience will give Marsh the support we need to compete, grow, and further enhance our business in a changing market.'"

    "We see tremendous potential in this 75-year franchise and intend to build upon Marsh's significant market share in the communities in which it serves," said Gary M. Talarico, managing director of Sun Capital Partners, Inc. "We also look forward to working with the management team and employees of the company to continue to deliver excellent value to the Marsh customers."

    It remains unclear who will lead the supermarket chain once the deal is complete, but industry observers say a new hand at the helm is long overdue.

    "The Marsh family sold the company just in time," says Burt Flickinger, managing director of Reach Marketing in New York. "Marsh Supermarkets is clearly caught in a crossfire that includes Meijer, Kroger, Target, and Wal-Mart. They're in an unwinnable pricing and promotion war. Marsh was credited with sponsoring the Indy 500 over the years, and while they've done a superb job in sports marketing, that unfortunately didn't translate sufficiently in terms of profitable sales in stores."

    Citing the positives, Flickinger noted that Marsh is blessed with a number of different formats. The company operates 69 conventional Marsh supermarkets, 38 LoBill Foods stores, eight O'Malia Food Markets, 154 Village Pantry convenience stores, and two Arthur's Fresh Market stores in Indiana and western Ohio.

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