- Adds leading West Coast focused
wholesale grocery and specialty distributor to SUPERVALU’s existing
distribution network, bringing together two highly complementary
organizations with combined 2016 sales of approximately $16
billion
- Combined business designed to deliver
value to SUPERVALU stockholders with at least $60 million in run
rate cost synergies expected to be realized by the end of the third
year of operations
- Creates opportunity to leverage
Unified’s comprehensive specialty and ethnic offerings across
SUPERVALU’s existing customer network while providing Unified’s
retail base the ability to benefit from SUPERVALU’s extensive
professional services portfolio
- SUPERVALU to use cash on hand and
borrowings under its credit facilities to purchase Unified’s equity
and repay Unified’s outstanding net debt, giving SUPERVALU the
flexibility to further focus on growing its customer base while
efficiently delivering best in class wholesale services aimed at
enhancing customers’ competitiveness
SUPERVALU INC. (NYSE: SVU) and Unified Grocers, Inc. today
announced that they have entered into a definitive merger agreement
for SUPERVALU to acquire Unified Grocers in a transaction valued at
approximately $375 million, comprised of approximately $114 million
in cash for 100 percent of the outstanding stock of Unified Grocers
plus the assumption and pay-off of Unified Grocers’ net debt at
closing (approximately $261 million as of April 1, 2017).
This Smart News Release features multimedia.
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This transaction will bring together two highly complementary
grocery wholesale organizations with combined sales of
approximately $16 billion in 2016. Together, SUPERVALU and Unified
operate 24 distribution centers supplying customers in 46 states
and serve a combined customer base of over 3,000 stores. The
combined company will be 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. The acquisition also 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’re thrilled at the opportunity to bring together these two
great organizations,” said Mark Gross, SUPERVALU’s President and
Chief Executive Officer. “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.”
Gross continued, “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.
We will make a great team together.”
“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,” said Unified
Grocers’ President and CEO, Bob Ling. “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.”
Transaction Overview
The transaction, which was unanimously approved by each
company’s board of directors, is currently expected to close in
mid-to-late summer 2017, subject to approval by Unified’s
shareholders and other customary closing conditions. Following
completion of the merger, Unified Grocers will be a wholly-owned
subsidiary of SUPERVALU.
Following the completion of the transaction, SUPERVALU, with its
headquarters in Eden Prairie, Minnesota, will maintain an important
and visible presence in Commerce, California, Unified’s
headquarters, and throughout the West Coast, including management
and employees of the combined company.
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. These synergies will be primarily derived from utilizing
the scale and expertise of the combined company as well as
consolidation of select back office functions. To achieve these
synergies, SUPERVALU expects to incur transition and integration
costs of up to $60 million within the first two years following the
completion of the transaction. The transaction is expected to be
accretive to earnings per share, excluding the transition and
integration costs as well as potential purchase accounting
adjustments, in the first full fiscal year following closing which
begins on February 25, 2018.
RBC Capital Markets, LLC acted as SUPERVALU’s financial advisor
and Faegre Baker Daniels LLP and Cleary Gottlieb Steen &
Hamilton LLP acted as SUPERVALU’s legal counsel. Moelis &
Company LLC acted as financial advisor to Unified Grocers and
Sullivan & Cromwell LLP acted as Unified’s legal counsel.
Conference Call and Webcast
Details
A SUPERVALU conference call to discuss this announcement is
scheduled for Tuesday, April 11, 2017 at 9:00 a.m. central time.
This call can be accessed by dialing (877) 814 - 2415 and providing
6782148 as the conference ID number. The call will also be webcast
live at www.supervaluinvestors.com (click on microphone icon). A
replay of the call will be archived at www.supervaluinvestors.com.
To access the website replay, go to the "Investors" link and click
on "Presentations and Webcasts."
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and
retailers in the U.S. with annual sales of approximately $13
billion. 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 Company’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
(store counts as of December 3, 2016). Headquartered in Minnesota,
SUPERVALU has approximately 30,000 employees. For more information
about SUPERVALU visit www.supervalu.com.
About Unified Grocers
Founded in 1922, Unified Grocers is a retailer-owned wholesale
grocery distributor that supplies independent retailers throughout
the western United States. Unified and its subsidiaries offer
independent retailers all the resources they need to compete in the
supermarket industry. Headquartered in Commerce, California,
Unified Grocers has 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. Unified owns approximately 3 million square feet of real
estate.
Additional Information and Where to
Find it
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of Unified by SUPERVALU. In
connection with the merger, Unified intends to file relevant
materials with the Securities and Exchange Commission (the "SEC"),
including a preliminary proxy statement on Schedule 14A. Following
the filing of the definitive proxy statement with the SEC, Unified
will mail the definitive proxy statement and a proxy card to each
shareholder entitled to vote at the special meeting of shareholders
relating to the merger. SHAREHOLDERS OF UNIFIED ARE URGED TO
CAREFULLY READ THESE MATERIALS IN THEIR ENTIRETY (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS
THAT UNIFIED WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER.
The proxy statement and other relevant materials (when available),
and any and all documents filed by Unified with the SEC, may also
be obtained for free at the SEC’s website at www.sec.gov. In
addition, shareholders may obtain free copies of the documents
filed with the SEC by Unified via the Financial Information section
of Unified’s website at www.unifiedgrocers.com, by calling Unified
toll-free at 800-242-9907 or by emailing Unified at
corp.sec@unifiedgrocers.com.
Participants in
Solicitation
SUPERVALU, Unified and their respective directors and officers
may be deemed to be participants in the solicitation of proxies in
respect of the transactions contemplated by the merger agreement.
Information regarding Unified’s directors and executive officers is
contained in Unified’s proxy statement dated January 24, 2017,
previously filed with the SEC. To the extent holdings of securities
by such directors or executive officers have changed since the
amounts printed in Unified’s 2017 proxy statement, such changes
have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC. Additional information regarding the
identity of potential participants, and their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the proxy statement to be filed by Unified in connection with the
merger.
Forward Looking
Statements
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information, the matters
set forth in this news release and related conference call,
particularly those pertaining to the expected completion of the
merger (including the timing thereof), the ability to consummate
the merger (including but not limited to the receipt of all
required regulatory approvals) and SUPERVALU’s expectations,
guidance, or future operating results (including expected
synergies), and other statements identified by words such as
"estimates" "expects," "projects," "plans," "intends," "outlook"
and similar expressions are forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to
differ materially, including the ability to satisfy the closing
conditions and close the proposed acquisition on a timely basis or
at all, the possibility that modifications to the terms of the
transaction may be required in order to obtain or satisfy all
required approvals, business disruption, ability to achieve
operational efficiencies, including synergistic and other benefits
of the proposed acquisition, ability to effectively retain key
employees and maintain and grow customer relationships, ability to
effectively manage organization and integration changes during the
pendency of or following the transaction, ability to achieve
expected financial results for the combined entity and other risk
factors relating to the business or industry as detailed from time
to time in Unified’s and SUPERVALU's reports filed with the SEC.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this news release.
For more information, see the risk factors described in each of
Unified’s and SUPERVALU’S Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and other filings with the SEC. Unless legally
required, Unified and SUPERVALU undertake no obligation to update
or revise publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20170410006235/en/
For SUPERVALU
Inquiries:Investors:Steve Bloomquist,
952-828-4144steve.j.bloomquist@supervalu.comorMedia:Jeff
Swanson, 952-903-1645jeffrey.s.swanson@supervalu.comorFor Unified Inquiries:Media:Paul
Dingsdale, 323-881-4150pdingsdale@unifiedgrocers.com
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