United Natural Foods Inc. Plans to Acquire $ 2.9 billion in Cash for Supervalu Inc.
The deal announced on Thursday would create a large, diversified food distributor to sell traditional grocery stores through Supervalu and Natural / Organic retailer serviced by United Natural Foods, whose main buyer is Whole Foods Market
As part of the transaction, United Natural Foods would buy Supervalu for $ 32.50 per share, a 67% premium from the share's closing price on 25th July and the Company's Minneapolis Debentures and Liabilities
United Natural Foods generated $ 9.3 billion in revenues in fiscal year 2017, while Supervalu posted $ 14.2 billion in revenues in fiscal year 201
This transaction accelerates United Natural Foods' growth strategy by expanding our product range immediately, providing us with an attractive, comprehensive product profile to make Tffolio a broader customer universe, "said Steve Spinner, Chairman and Chief Executive Officer by United Natural Foods, Providence, RI. "Combining our leading position in natural and organic foods with Supervalu's presence in high-speed products makes us the partner of choice for a wider range of customers. Together, we can offer our better products and other high-growth products segments that enhance the competitive advantage of customers in a dynamic market.
"These benefits, as well as our increased efficiency and productivity, will enable us to create value for our shareholders, enhance opportunities for our suppliers to offer a broader range to our clients." We have new perspectives for our employees over the long term
It is planned that spinners will direct the combined company and Sean Griffin, chief operating officer of United Natural Foods, will take over the integration of Supervalu after the deal Griffin becomes a committee with executives from United Natural Foods and Lead Supervalu to leverage each company's best practices, deliver key synergies, and ensure smooth integration.
The acquisition will also result in the withdrawal of Supervalu from the retail sector, with United Natural Foods plans to Supervalus retail assets "in a thoughtful and wi to dispose of the businesslike way ". No timetable was given. Currently, Supervalu operates 114 supermarkets under the flags Cub Foods, Hornbacher & Shoppers.
"The combination of United Natural Foods and Supervalu provides a substantial premium, providing our shareholders with value, significant benefits to our clients, enhanced opportunities for our clients' employees, and the ability for us and our vendors to efficiently serve a diverse customer base "said Supervalu CEO Mark Gross.
For Supervalu, the transaction with United Natural Foods comes in the midst of a proxy fight to overhaul its board. The investment company Blackwells Capital LLC has nominated its own list of directors and called for changes in the management of Supervalu. Senior executives have pursued a misguided growth strategy and should explore other options, including possible sale of the company. A vote is scheduled for the Supervalu Annual General Meeting on 16 August.
To compete with larger food companies and fast-growing online gamblers, Supervalu has rebuilt its business to bolster wholesale and strengthen its financial footing. The largest part of the company's revenue now goes to food wholesaling: 78% of total sales in fiscal year 2018, just 44% just two years ago. Supervalu's wholesale division operates a network of 3,437 stores, including 3,323 stores operated by its food distribution customers.
"We have been embarking on an ambitious strategic transformation for more than two years, and we believe this transaction is the best and natural next step for our shareholders, clients and employees," Gross said of the acquisition by United Natural Foods I am very proud of the unwavering commitment and focus of our employees to drive our strategic transformation and serve our customers, and I am confident that Supervalu together and United Natural Foods will be well positioned to succeed and help our customers – In today's grocery business landscape. "
United Natural Foods said the acquisition of Supervalu will significantly expand its customer base, including through additional retail channels, to expand its geographic market coverage. In addition, United Natural Foods expects more cross-selling opportunities by incorporating high-growth perimeter categories such as meat and products into its natural and organic products. The company also forecasts more than $ 175 million in cost synergies in the third year after the acquisition.
Both Boards have approved the transaction, which is expected to close in the fourth quarter before regulatory and regulatory action is completed Shareholder approval and other customary closing conditions.
Supervalu announced its first quarterly results for the 2019 financial year on Thursday. Revenue for the 16-month quarter ended June 16 was $ 4.76 billion, up 35% from $ 3.52 billion a year ago, driven by the acquisition of Unified Grocers and Associated Grocers of Florida in 2017. Wholesale sales increased 49% to $ 3.81 billion, while retail sales declined 0.6% to $ 901 million. Same-store sales climbed 0.4%, but were more than offset by lost sales from closed markets, Supervalu said.
On the bottom line, Supervalu posted a net loss of $ 27 million, or 70 cents per diluted share. compared to net income of $ 9 million or 21 cents per diluted share a year ago. Adjusted net loss was $ 7 million, or 17 cents per diluted share, while net income was $ 21 million, or 51 cents per diluted share. According to Zacks Investment Research, analysts had forecast average adjusted earnings per share of 35 cents, with estimates ranging from 2 cents to 65 cents.