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United Natural Foods buying Supervalu in $2.9 billion deal

Thursday, July 26, 2018   (0 Comments)

Minneapolis/St. Paul Business Journal
Mark Reilly



Supervalu Inc., which for months has been facing a leadership challenge from a dissident investor, on Thursday said it had agreed to be acquired by grocery distributor United Natural Foods in a deal worth $2.9 billion in cash and debt.

Providence, R.I.-based United Natural Foods (NASDAQ: UNFI), a big supplier to Whole Foods Market Inc., said it will pay $32.50 per share in cash for Supervalu, a 67 percent premium over Supervalu's closing price Monday. Eden Prairie-based Supervalu (NYSE: SVU) hasn't traded at that level since early 2017. That comes out to $1.26 billion in cash; the balances of the deal's value comes in the assumption of Supervalu debt.

UNFI CEO and Chairman Steven Spinner will lead the combined company, which will drop Supervalu's retail business, including Cub Foods in the Twin Cities.

It's unclear for now what impact the acquisition will have on Supervalu's other local operations — Supervalu is the 18th largest employer in Minnesota, with nearly 9,400 workers. But there will likely be some impact, especially with the combined company being run from Rhode Island. The companies forecast $175 million in "cost synergies" over the first three years of the acquisition.

"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," said Spinner in a statement.


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