Wired News – Natural and Organic Products Distributor United Natural Foods to Acquire Grocery Chain SUPERVALU

LONDON, UK / ACCESSWIRE / July 30, 2018 / If you want access to our free research report on United Natural Foods, Inc. (NASDAQ: UNFI) (“UNFI”), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=UNFI as the Company’s latest news hit the wire. On July 26, 2018, the Company announced that it has signed an agreement to acquire SUPERVALU Inc. (NYSE: SVU). The all-cash deal is valued at approximately $2.9 billion, including debts. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, United Natural Foods and SUPERVALU most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

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The deal is expected to create one of the largest premier wholesaler and distributor of foods in North America.

Management Quotes

Sharing his views on the acquisition of SUPERVALU, Steven Spinner, Chief Executive Officer (CEO) and Chairman of UNFI, said:

“Combining our leading position in natural and organic foods with SUPERVALU’s presence in fast-turning products makes us the partner of choice for a broader range of customers. Together, we can provide our ‘better for you’ products, as well as other high-growth segments, improving customers’ competitive advantages in a dynamic marketplace.”

Mark Gross, CEO of SUPERVALU, added:

“We have been executing an ambitious strategic transformation for over two years. We believe that this transaction is the best and natural next step for our stockholders, customers, and employees.”

Terms of Acquisition

As per the terms of the acquisition, UNFI has agreed to pay $32.50 in cash for each SUPERVALU share, which works out to approximately $2.9 billion. UNFI’s offer includes the assumption of SUPERVALU’s debts and liabilities. The offer is at a 67% premium of SUPERVALU’s share price of $19.45 at the close on July 25, 2018, which was the last day of trading before the deal was announced. The deal has received the approval from the Boards of Directors of both Companies. The transaction is expected to close in Q4 2018, subject to the receipt of approvals from shareholders and regulators, and the fulfilment of closing conditions.

Once the merger is complete, Steven Spinner will helm the business of the merged entity, while Sean Griffin, Chief Operating Officer (COO) of UNFI will focus on the integration of SUPERVALU into UNFI. Griffin will lead a team consisting of executives from both Companies to ensure a faster and smoother integration, the implementation of best practices from each Company, and the realization of important synergies.

UNFI plans to finance the acquisition mostly via fresh debt from Goldman Sachs.

Going forward, UNFI plans to divest the retail assets of SUPERVALU in a planned and economic manner. The Company expects that the stronger cash flows due to the acquisition and the funds realized from the divestment of SUPERVALU’s retail assets will enable it to pay off its debts sooner.

Value Proposition

UNFI expects the deal to expand its customer base across channels especially in the ‘better for you’ products space where it has lower representation. UNFI will get cross-selling opportunities with a larger products portfolio, including meat and produce, which will complement its existing range of natural and organic products. UNFI is expected to expand its geographic footprint and scale of operations, resulting in increased efficiencies and effectiveness. The merged entity expects to leverage the latest technology for streamlining processes and reduce costs in the long-run while offering the best in customer experiences. UNFI expects the acquisition to be accretive to its earnings per share (EPS) within one year of closing the deal, and achieve a double-digit adjusted EPS growth after the first year. UNFI expects to realize run-rate cost synergies of over $175 million by the third year of finalizing the merger.

Reasons behind sale of SUPERVALU

The deal comes in at an opportune time for SUPERVALU, which was under pressure from activist investor, Blackwells Capital LLC, who was pushing for a complete overhaul of the Company’s Board and pushing for the sale of the balance SUPERVALU stores. In May 2018, SUPERVALU had completed the sale of 21 of its 38 Farm Fresh stores to 3 different retailers, namely: Harris Teeter, Kroger Mid-Atlantic Division, and Food Lion. In the same month, SUPERVALU also completed the sale of 7 of its distribution centers and leased them back from the owner for an initial term of 20 years, with 5 five-year renewal options. The sale and lease back of the distribution centers are expected to be completed in October 2018. The proceeds from the sale of its stores and distribution centers were aimed at paying off its huge debts. SUPERVALU had been struggling to manage its debts taken for the acquisition of Albertson’s, Inc. in 2006 for approximately $17.4 billion. SUPERVALU had been exploring strategic options for its business since April 2018.

About SUPERVALU Inc.

Eden Prairie, Minnesota-based SUPERVALU is one of the largest grocery wholesalers and retailers in the US. It operated a network of 3,437 stores as on February 24, 2018, composed of 3,323 wholesale primary stores and 114 traditional retail grocery stores operated under 3 retail banners in 3 geographic regions. It has 18 distribution centers and specialty warehouses and its retail business consist of grocery chains – CUB FOODS in Minneapolis-St. Paul, HORNBACHER’S in the Fargo-Moorhead area, SHOP ‘N SAVE in St. Louis, and SHOPPERS in Washington D.C. The Company has approximately 23,000 employees, and reported annual sales of approximately $14 billion in the fiscal year 2018.

About United Natural Foods, Inc.

Providence, Rhode Island-based UNFI is a wholesale distributor to the natural, organic, and specialty industry in the US and Canada. The Company caters to a broad customer base consisting of natural product superstores and ecommerce retailers, to conventional supermarket chains and independent health food retailers. UNFI is a major supplier to Whole Foods Market which was acquired by Amazon in August 2017. The Company distributes over 110,000 natural and organic foods and wellness products and supplies to over 43,000 customer locations across the US and Canada. The Company also has a highly-evolved logistics network to support its operations from the distribution centers. UNFI also owns and operates 12 retail natural products stores, mainly in Florida, through its subsidiary, Earth Origins Market.

Stock Performance Snapshot

July 27, 2018 – At Friday’s closing bell, United Natural Foods’ stock declined 5.71%, ending the trading session at $32.51.

Volume traded for the day: 3.58 million shares, which was above the 3-month average volume of 573.23 thousand shares.

After last Friday’s close, United Natural Foods’ market cap was at $2.08 billion.

Price to Earnings (P/E) ratio was at 10.96.

The stock is part of the Services sector, categorized under the Food Wholesale industry.

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