Supervalu to acquire Unified Grocers in roughly $375M transaction
Supervalu and Unified Grocers announced that they have entered into a definitive merger agreement for SUPERVALU to acquire Unified Grocers in a transaction valued at approximately $375M, comprised of approximately $114M in cash for 100% of the outstanding stock of Unified Grocers plus the assumption and pay-off of Unified Grocers' net debt at closing. This transaction will bring together two highly complementary grocery wholesale organizations with combined sales of approximately $16B 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. 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. 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 $60M 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 $60M 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.