Specialty grocer The Fresh Market, which operates 186 stores in 27 states, says it has entered into a definitive agreement to be acquired by an affiliate of Apollo Global Management for approximately $1.36 billion. The announcement dismisses rumors that circulated earlier this year that the Greensboro, North Carolina-based company likely would be purchased by The Kroger Co. It also will take The Fresh Market, which went public in November 2010, private.
The $28.50 per share all-cash offer by Apollo represents a premium of approximately 24 percent over The Fresh Market’s closing share price on March 11 and a premium of approximately 53 percent over the Feb. 10, closing share price, the day prior to press speculation regarding a potential transaction.
The announcement follows a review of strategic alternatives undertaken by The Fresh Market’s board of directors to maximize stockholder value. The transaction will be implemented through a cash tender offer at $28.50 per share. The transaction was unanimously approved by the board of directors of The Fresh Market, other than Ray Berry, chairman and founder of The Fresh Market, who recused himself from all board discussions related to the review and from the board vote approving the transaction. Berry and his son, Brett Berry, who collectively own approximately 9.8 percent of The Fresh Market’s outstanding shares, have agreed not to tender shares held by them into the tender offer and will both participate and rollover the vast majority of their holdings in the transaction with Apollo. In addition, George Golleher, with whom Apollo has had a long-term operating partner consulting relationship and who was formerly CEO of Smart & Final and Ralphs Grocery Co./Food 4 Less during ownership by other Apollo affiliated funds, will be a co-investor with the Apollo funds in the transaction.
“We are pleased to have reached this agreement with Apollo, which follows a comprehensive review of strategic and financial alternatives that generated interest from numerous parties. After an open and thorough process, our board concluded that this offer maximizes value for our stockholders,” said Rich Noll, The Fresh Market’s lead independent director.
Added Rick Anicetti, The Fresh Market’s president and CEO, “We are excited about this transaction with Apollo, which recognizes the value of The Fresh Market’s strong brand and significant growth prospects while providing stockholders with an immediate and substantial premium. Apollo is a highly-regarded investor, bringing deep industry expertise and financial resources, and we look forward to working with them to build on our progress in achieving our strategic plan to deliver long-term profitable growth.”
Andrew S. Jhawar, senior partner and head of the retail and consumer group at Apollo, said, “We are delighted about this transaction with The Fresh Market, which was one of the early pioneers in small-box grocery, offering unique, delicious and healthy food with a keen focus on perishables. We believe there is a significant opportunity to enhance the brand, merchandise offering and price-value combination to make The Fresh Market a primary destination for food shoppers, while at the same time being committed to social responsibility through partnerships with local vendors and communities. Our team at Apollo has had the tremendous fortune of having executed transactions in several consumables retailers and brands—such as Sprouts Farmers Market, Smart & Final, Hostess Brands and General Nutrition Centers, among others—that have undergone significant transformations under our strategic guidance and we intend to bring that experience to bear at The Fresh Market. We look forward to partnering with Ray Berry, Brett Berry and George Golleher, and beginning our discussions with the executive management team and the over 13,000 team members at The Fresh Market so that we can assist the company in delivering the most inspiring and engaging food shopping experience in the industry with best-in-class customer service.”
The transaction is expected to close in the second quarter of 2016.