- Supervalu announced it will merge with Unified Grocers in a $375 million deal, the companies said in a press release. The transaction is expected to close this summer.
- The grocery wholesalers had combined sales of nearly $16 billion in 2016. Supervalu and Unified operate 24 distribution centers throughout 46 states and serve a customer base of more than 3,000 stores.
- "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," said Supervalu's president and CEO Mark Gross in a statement.
Gross said the deal would enhance the company’s ability to help its customers better compete in the evolving grocery industry. The purchase provides Supervalu with additional growth opportunities across multiple geographies, including the western U.S., as well as other food areas like specialty, gourmet and natural/organic.
Following the sale of its Sav-A-Lot stores and the acquisition of new wholesale customers, Supervalu execs said in its last earnings report it expected to increase its fiscal year 2018 revenue by $1 billion, or 10%. During the last year, the company has re-focused its efforts on wholesaling, and has picked up some lucrative new contracts.
Supervalu expects to spend about $60 million on transition and integration costs in the first two years after the deal with Unified Grocers closes. It hopes to recoup the money within three years. For Supervalu, a stronger wholesale business, coupled with a low stock price, could make it a more attractive acquisition target for SpartanNash Co. and United Natural Foods. One downside to a Supervalu acquisition is the company’s debt at around $2.5 billion. To reduce it, Supervalu could consider divesting more of its retail operations, which have struggled in recent years.