In the latest consolidation in US grocery wholesaling industry, United Natural Foods, Inc. (UNFI) and SUPERVALU INC. (Supervalu) announced on July 26 a definitive agreement under which UNFI will acquire Supervalu for $32.50 per share in cash, or approximately $2.9 billion, including the assumption of outstanding debt and liabilities.
Amazon's acquisition of Whole Foods has spurred its first big deal among the grocery distributors, according to CNBC news, which said that UNFI's $2.9 billion acquisition of Supervalue lessens its reliance on Whole Foods, a relationship that has been shrouded in uncertainty ever since Amazon acquired the natural grocer.
"Whole Foods accounts for roughly 33 percent of UNFI's business and has a contract with the distributor that is set to expire in 2025," CNBC news said. "It remains unclear whether Amazon will renew that contract or attempt distribution on its own."
"This transaction accelerates UNFI's 'Build out the Store' growth strategy by immediately enhancing our product range, equipping us to bring an attractive, comprehensive product portfolio to an expanded universe of customers," said Steve Spinner, UNFI's CEO and chairman.
"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.
"These benefits, plus our increased efficiency and productivity, will enable us to create value for our shareholders, enhance opportunities for our suppliers, provide a broader assortment for our customers and create new prospects for our associates over the long term."
Mr Spinner will lead the combined entity, while Sean Griffin, UNFI chief operating officer, will lead the Supervalu integration efforts, post close. Over time, UNFI plans to divest Supervalu retail assets in a thoughtful and economic manner.
Based in Providence, R.I., UNFI delivers healthier food options to people throughout the United States and Canada. UNFI distributes over 110,000 products to more than 43,000 customer locations including natural product superstores, independent retailers, conventional supermarket chains, ecommerce retailers, and food service customers.
Mark Gross, CEO of Supervalu, said that the combination of UNFI and Supervalu provides a substantial premium and delivers certainty of value to our stockholders, meaningful benefits to our customers, expanded opportunities for our employees, and the ability for us and our vendors to efficiently serve a varied customer base.
In December 2017, Supervalu completed its acquisition of grocery wholesalers Associated Grocers of Florida, Inc. The estimated $193 million transaction boosted Supervalu’s national distribution network with annual sales of around $650 million.
In June 2017, Supervalu completed the acquisition of Unified Grocers, Inc. in a transaction valued at $390 million, providing the wholesaler with distribution to independent grocers on the West Coast.
Minnesota-based Supervalu Inc. is one of the largest grocery wholesalers and retailers in the US with fiscal 2018 annual sales of approximately $14 billion. Supervalu serves customers across the US through a network of 3,437 stores composed of 3,323 wholesale primary customers serviced by Supervalu's food distribution business and 114 traditional retail grocery stores.