The Fresh Market, Inc. (NASDAQ:TFM) (“The Fresh Market” or the
“Company”), a growing specialty grocery retailer, and an affiliate
of Apollo Global Management, LLC (NYSE:APO) (together with its
consolidated subsidiaries, “Apollo”) today announced that they have
entered into a definitive agreement (the “Merger Agreement”)
whereby certain funds managed by Apollo, a leading global
alternative investment manager, will acquire The Fresh Market for
approximately $1.36 billion.
The $28.50 per share all-cash offer by the
Apollo Funds represents a premium of approximately 24% over The
Fresh Market’s closing share price on March 11, 2016, and a premium
of approximately 53% over the February 10, 2016 closing share
price, the day prior to press speculation regarding a potential
transaction.
The announcement follows an open and thorough
review of strategic alternatives undertaken by The Fresh Market
Board of Directors to maximize stockholder value. The
transaction will be implemented through a cash tender offer at
$28.50 per share. The transaction was unanimously approved by the
Board of Directors of The Fresh Market, other than Ray Berry,
Chairman and Founder of The Fresh Market, who recused himself from
all Board discussions related to the review and from the Board vote
approving the transaction. Ray Berry and Brett Berry, who
collectively own approximately 9.8% of The Fresh Market’s
outstanding shares, have agreed not to tender shares held by them
into the tender offer and will both participate and rollover the
vast majority of their holdings in the transaction with Apollo. In
addition, George Golleher, with whom Apollo has had a long-term
operating partner consulting relationship and who was formerly
Chief Executive Officer of Smart & Final and Ralphs Grocery
Company/Food-4-Less during ownership by other Apollo affiliated
funds, will be a co-investor with the Apollo funds in the
transaction.
“We are pleased to have reached this agreement
with Apollo, which follows a comprehensive review of strategic and
financial alternatives that generated interest from numerous
parties. 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.
“We are excited about this transaction with
Apollo, which recognizes the value of The Fresh Market’s strong
brand and significant growth prospects while providing stockholders
with an immediate and substantial premium,” said Rick Anicetti, The
Fresh Market’s President and Chief Executive Officer. “Apollo
is a highly-regarded investor, bringing deep industry expertise and
financial resources, and we look forward to working with them to
build on our progress in achieving our strategic plan to deliver
long-term profitable growth.”
“We are delighted about this transaction with
The Fresh Market, which was one of the early pioneers in small-box
grocery, offering unique, delicious and healthy food with a keen
focus on perishables,” said Andrew S. Jhawar, Senior Partner and
Head of the Retail and Consumer Group at Apollo. “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. We look forward to
partnering with Ray Berry, Brett Berry and George Golleher, and
beginning our discussions with the executive management team and
the over 13,000 team members at The Fresh Market so that we can
assist the company in delivering the most inspiring and engaging
food shopping experience in the industry with best-in-class
customer service.”
The transaction – which is expected to close in
the second quarter of 2016 – is conditioned upon satisfaction of
the minimum tender condition which requires that shares
representing more than 50 percent of the Company's common shares
(other than shares held by Ray and Brett Berry that are being
rolled over) be tendered, the receipt of approval under the
Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 and
other customary closing conditions.
Under the terms of the Merger Agreement, the
Company may actively solicit alternative acquisition proposals
during a 21-day period following the execution date of the
definitive agreement, continuing until midnight on April 1,
2016. There can be no assurances that this process will
result in a superior proposal, and The Fresh Market does not intend
to discuss any developments with regard to this process unless and
until the Company's Board of Directors makes a decision with
respect to any potential superior proposal.
The transaction has fully committed financing in
place. It will be financed primarily through the incurrence of $800
million in new senior secured notes and an equity contribution of
approximately $525 million from funds managed by Apollo in addition
to the equity rollover from the Berrys. The Fresh Market will
also enter into a new $100 million revolving credit facility
concurrently with the closing of the merger.
J.P. Morgan Securities LLC is serving as the
exclusive financial advisor to The Fresh Market, and Cravath,
Swaine & Moore LLP and Richards, Layton & Finger, P.A. are
serving as its legal advisors. Barclays, RBC Capital Markets, LLC,
Jefferies and Macquarie Capital are serving as financial advisors
to Apollo. The debt financing is being committed to by Barclays,
Royal Bank of Canada, Jefferies Finance and Macquarie, and Davis
Polk & Wardwell LLP is serving as their legal counsel.
Morgan, Lewis & Bockius LLP and Morris, Nichols, Arsht &
Tunnell LLP are acting as legal advisors to Apollo and Paul, Weiss,
Rifkind, Wharton & Garrison LLP is acting as legal advisor to
Apollo as it relates to the debt financing.
About The Fresh Market,
Inc.
Founded by Ray Berry in 1982, The Fresh Market,
Inc. is a specialty grocery retailer focused on providing
high-quality products in a unique and inviting atmosphere with a
high level of customer service. As of March 14, 2016, the Company
operates 186 stores in 27 states across the United States.
For more information, please visit www.thefreshmarket.com.
About Apollo
Apollo is a leading global alternative
investment manager with offices in New York, Los Angeles, Houston,
Chicago, Bethesda, Toronto, London, Frankfurt, Madrid, Luxembourg,
Mumbai, Delhi, Singapore, Hong Kong and Shanghai. Apollo had assets
under management of approximately $170 billion as of December 31,
2015 in private equity, credit and real estate funds invested
across a core group of nine industries where Apollo has
considerable knowledge and resources. For more information about
Apollo, visit www.agm.com.
Forward Looking Statements:
This communication contains forward-looking
statements in addition to historical information. The Fresh Market
and Apollo use words such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “forecast,” “intend,” “looking forward,”
“may,” “plan,” “potential,” “project,” “should,” “target,” “will”
and “would” or any variations of these words or other words with
similar meanings to identify such forward-looking statements. All
statements that address activities, events or developments that The
Fresh Market and/or Apollo intend, expect or believe may occur in
the future are forward-looking statements. These forward-looking
statements may relate to such matters as The Fresh Market industry,
business strategy, goals and expectations concerning The Fresh
Market’s market position, future operations, future performance or
results, margins, profitability, capital expenditures, liquidity
and capital resources, interest rates and other financial and
operating information and the outcome of contingencies such as
legal and administrative proceedings. The following are some
of the factors that could cause actual future results to differ
materially from those expressed in any forward-looking statements:
(i) uncertainties as to the timing of the offer and the subsequent
merger; (ii) the risk that the offer or the subsequent merger may
not be completed in a timely manner or at all; (iii) uncertainties
as to the percentage of The Fresh Market’s stockholders tendering
their shares in the offer; (iv) the possibility that competing
offers or acquisition proposals for The Fresh Market will be made;
(v) the possibility that any or all of the various conditions to
the consummation of the offer or the subsequent merger may not be
satisfied or waived, including the failure to receive any required
regulatory approvals from any applicable governmental entities (or
any conditions, limitations or restrictions placed on such
approvals); (vi) the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger
Agreement, including in circumstances which would require The Fresh
Market to pay a termination fee or other expenses; (vii) risks
regarding the failure to obtain the necessary financing to complete
the transactions contemplated by the Merger Agreement; (viii) risks
related to the debt financing arrangements entered into in
connection with the Merger Agreement; (ix) the effect of the
announcement or pendency of the transactions contemplated by the
Merger Agreement on The Fresh Market’s ability to retain and hire
key personnel, its ability to maintain relationships with its
customers, suppliers and others with whom it does business, or its
operating results and business generally; (x) risks related to
diverting management’s attention from The Fresh Market’s ongoing
business operations; (xi) the risk that stockholder litigation in
connection with the transactions contemplated by the Merger
Agreement may result in significant costs of defense,
indemnification and liability and (xii) other factors as set forth
from time to time in The Fresh Market’s filings with the Securities
and Exchange Commission, including its Form 10-K for the fiscal
year ended January 25, 2015 and any subsequent Form 10-Qs.
Any forward-looking statement made by The Fresh Market or Apollo in
this communication speaks only as of the date hereof. Factors or
events that affect the transactions or could cause The Fresh
Market’s actual results to differ may emerge from time to time, and
it is not possible for The Fresh Market or Apollo to predict all of
them. The Fresh Market and Apollo undertake no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future developments or otherwise,
except as may be required by any applicable securities laws.
Additional Information and Where to Find It
The tender offer for the outstanding shares of
The Fresh Market referenced in this press release has not yet
commenced. This communication is for informational purposes only
and is neither an offer to purchase nor a solicitation of an offer
to sell shares, nor is it a substitute for the tender offer
materials that Apollo and its acquisition subsidiary will file with
the U.S. Securities and Exchange Commission (the “SEC”) upon
commencement of the tender offer. At the time the tender offer is
commenced, Apollo and its acquisition subsidiary will file tender
offer materials on Schedule TO, and The Fresh Market thereafter
will file a Solicitation/Recommendation Statement on Schedule 14D-9
with the SEC with respect to the tender offer. THE TENDER OFFER
MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF SHARES OF THE FRESH MARKET ARE URGED TO
READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF THE FRESH
MARKET SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION
REGARDING TENDERING THEIR SECURITIES.
The Offer to Purchase, the related Letter of
Transmittal and certain other tender offer documents, as well as
the Solicitation/Recommendation Statement, will be made available
to all holders of shares of The Fresh Market at no expense to them.
The tender offer materials, the Solicitation/Recommendation
Statement and other related documents (when available) will be made
available for free at the SEC’s web site at www.sec.gov. Investors
and securityholders may obtain a free copy of the
Solicitation/Recommendation Statement and other related documents
(when available) that The Fresh Market files with the SEC, free of
charge, from The Fresh Market at ir.thefreshmarket.com or by
directing a request to Investor Relations, at 336-615-8065 or
investorrelations@thefreshmarket.com.
Media Contacts
For The Fresh Market:
The Fresh Market, Inc.
(336) 615-8065
investorrelations@thefreshmarket.com
For Apollo Global Management:
Apollo Global Management, LLC
Gary M. Stein, 212-822-0467
Head of Corporate Communications
gstein@apollolp.com
or
Rubenstein Associates, Inc. for Apollo Global Management, LLC
Charles Zehren, 212-843-8590
czehren@rubenstein.com
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