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Associated Wholesale Grocers Inc. (AWG) and Affiliated Foods Midwest Cooperative Inc. (AFM) have agreed to merge the two cooperatives’ distribution businesses.
AFM is a retailer-owned cooperative supplying members with more than 800 stores in 15 states, and AWG, also a cooperative, supplies more than 3,000 stores in 30 states. Going forward, members of both co-ops will be AWG members. Operations will cover a majority of the United States, excluding the Northeast and West Coast.
“This exciting endeavor is exactly what we need to allow our retailers to compete, grow and be profitable,” said Martin Arter, presiden/CEO of Norfolk, Neb.-based AFM. The synergies between the two distributors will help members grow through a lower cost of goods, he noted, adding, “Much credit is due to the vision of both AWG’s and AFM’s boards of directors to see the possibilities of what we could become.”
The merger also allows the new AWG to benefit not only from additional scale and buying power, but also from implementation of best practices that the two companies have developed in the more than 80 years that both cooperatives have been operating. “Combining our distribution center networks and support infrastructure will allow us to more effectively serve our growing numbers of independent member-retailers,” said David Smith, president/CEO of Kansas City, Kan.-based AWG. “This unified business will further strengthen our relationship with the vendor community, reduce operating expenses and subsequent cost of goods, and enhance our ability to support and serve our growing membership.”
The alliance, which was unanimously approved by the boards of both companies, is still subject to conditions, including approval by AFM shareholders, but is expected to close later this year.