Spartan Stores and Nash Finch announced yesterday that the two organizations have entered into an agreement to merge in an all-stock deal valued at $1.3 billion. When combined, Spartan shareholders will own roughly 58 percent of the company and Nash Finch shareholders will get the rest.
Terms of the deal might be surprising to some as Nash Finch is a larger company than Spartan. According to MLive.com, however, Nash Finch has been losing money.
"The outlook for both companies was quite similar," Scott Mushkin, an industry analyst with Wolfe Research, told the Star Tribune. "They were very well managed, but still not going anywhere."
Combined, the two grocery wholesalers will have 22 distribution centers in 37 states and Washington, D.C. The company will also have operations in Puerto Rico, Europe, Cuba, the Azores, Bahrain and Egypt. The two also operate 177 company-owned stores under the under the Family Fresh Market, Econofoods, Family Thrift Center, No Frills, Bag 'n Save, Avanza, Sun Mart, Family Fare Supermarkets, Glen's Markets, D&W Fresh Markets, VG's Food and Pharmacy and Valu Land banners.
Spartan's CEO Dennis Eidson will lead the new company with Nash Finch CEO Alec Covington serving as an advisor during the transition.
"By combining our resources, expertise and talent, we will become a stronger and more efficient organization with an enhanced ability to leverage our size, geographic reach and hybrid business model to better compete in the evolving grocery industry, said Mr. Eidson in a statement. "The scale of the combined company will provide efficiencies and savings in purchasing and strengthen our ability to serve our independent retail customers, military commissaries and exchanges and retail consumers."
Mr. Eidson is projecting the merger will create $50 million in savings as redundancies are eliminated.
- Spartan Stores Merging with Nash Finch - Progressive Grocer
- Spartan Stores and Nash Finch to Combine to Create One of the Leading Grocery Wholesale and Retail Operators in the U.S. - Spartan Stores, Inc.
- Why Spartan Stores will own bigger Nash Finch in merger deal, not vice versa - MLive.com
- Nash Finch deal reflects a shrinking industry - Star Tribune