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The Fresh Market has inked a deal under which New York-based equity firm Apollo Global Management LLC will acquire the specialty grocer for about $1.36 billion. The $28.50-per-share all-cash offer follows a review of strategic alternatives undertaken by The Fresh Market’s board of directors.
Reports earlier this year indicated that Cincinnati-based Kroger was poised to acquire The Fresh Market, which operates 183 stores in 27 states.
The transaction was unanimously approved by The Fresh Market’s board, other than Chairman and founder Ray Berry, who recused himself from all board discussions related to the review and from the vote approving the transaction. Berry and Brett Berry, who collectively own about 9.8 percent of the Greensboro, N.C.-based company’s outstanding shares, have agreed not to tender shares held by them into the tender offer and will both participate and roll over the vast majority of their holdings in the transaction with Apollo. Additionally, George Golleher, who has a long-term consulting relationship with Apollo and was formerly CEO of Smart & Final and Ralphs Grocery Co./Food-4-Less during ownership by other Apollo-affiliated funds, will be a co-investor with Apollo in the deal.
“After an open and thorough process, our board concluded that this offer maximizes value for our stockholders,” said Rich Noll, The Fresh Market’s lead independent director.
Rick Anicetti, the grocer’s CEO, noted that the transaction “recognizes the value of The Fresh Market’s strong brand and significant growth prospects while providing stockholders with an immediate and substantial premium. Apollo is a highly regarded investor, bringing deep industry expertise and financial resources.”
Referring to the grocer as “one of the early pioneers in small-box grocery, offering unique, delicious and healthy food with a keen focus on perishables,” Andrew S. Jhawar, senior partner and head of the retail and consumer group at Apollo, observed: “We believe there is a significant opportunity to enhance the brand, merchandise offering and price-value combination to make The Fresh Market a primary destination for food shoppers, while at the same time being committed to social responsibility through partnerships with local vendors and communities. Our team at Apollo has had the tremendous fortune of having executed transactions in several consumables retailers and brands – such as Sprouts Farmers Market, Smart & Final, Hostess Brands and General Nutrition Centers, among others – that have undergone significant transformations under our strategic guidance and we intend to bring that experience to bear at The Fresh Market.”
The deal is expected to close in the second quarter of 2016, subject to customary closing conditions.