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06/13/2022

Cardenas Markets to Be Acquired by Apollo Funds

Upon completion of acquisition, grocer will merge with Tony’s Fresh Market
Bridget Goldschmidt
Managing Editor
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Cardenas Tony's Merger
The combined Cardenas-Tony’s footprint will span nearly 80 stores across the western and Midwest United States, with approximately $1.8 billion in combined revenues.

Funds managed by global alternative asset manager Apollo have agreed to acquire Hispanic grocer Cardenas Markets from investment funds affiliated with international investment firm KKR. Upon completion of the deal, Apollo Funds will combine Tony’s Fresh Market, a Chicago-based portfolio company since its acquisition this past April, with Cardenas to create a Hispanic- and ethnic-focused grocer.

Both companies will continue to operate under their respective brands and local leadership while benefiting from greater scale, complementary capabilities and an expanded operating footprint, according to New York-based Apollo.

The combined Cardenas-Tony’s footprint will span nearly 80 stores across the western and Midwest United States, with approximately $1.8 billion in combined revenues. Cardenas CEO Doug Sanders will become CEO of the combined company and Cardenas chain, while Frank Ingraffia will continue as the CEO of 18-store Tony’s. 

“Since joining Cardenas, we have made great progress in growing and enhancing our operations with KKR’s support, and I am thrilled by the opportunity for our team to now partner with Frank and the Tony’s team, leveraging our collective strengths,” noted Sanders. “Together, as two of the highest-quality Hispanic and ethnic grocers, we can deliver even greater value to the communities we serve. Apollo private equity has an extensive best-in-class track record of success in food retail, and I am thrilled to partner with Andy Jhawar and the Apollo team again in this exciting next chapter for Cardenas. I would also like to thank KKR, which has been a tremendous strategic partner over the past six years, helping us grow and professionalize the business.” 

According to Apollo Private Equity partners Andrew Jhawar and Joanna Reiss: “Cardenas has grown significantly over the last several years under Doug’s leadership, and we are excited to accelerate its growth in combination with Tony’s in this next phase. We are excited to once again partner with Doug following our highly successful investment in Sprouts Farmers Market, which Doug led as CEO under Apollo Funds’ ownership. Cardenas and Tony’s have robust positions in the ethnic grocer space, and together can leverage best practices across their complementary go-to-market strategies, merchandising, customer loyalty programs and more. This transaction will combine the best of both retailers and provide greater opportunities and scale for the respective brands and teams as they continue to bring quality, affordable groceries to diverse communities.”

In 2016, KKR acquired Cardenas from the Cardenas family with the idea of transforming the business into a growth platform. While owned by KKR, Cardenas doubled in size through a combination of organic growth and strategic acquisitions.   

The transaction is subject to customary closing conditions and is expected to wrap up by the third quarter of 2022. Financial terms of the deal weren’t disclosed.

Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel to the Apollo Funds, and Solomon Partners acted as lead financial advisor to Cardenas and KKR. BMO Capital Markets also advised, with Kirkland & Ellis LLP serving as legal advisor to Cardenas and KKR. Credit Suisse, Wells Fargo and Rabobank provided committed debt financing for the transaction.

Ontario, Calif.-based Cardenas currently operates 51 stores under the Cardenas Markets banner, seven stores under the Los Altos Ranch Markets banner and one store under Cardenas Ranch Markets banner, with locations across California, Nevada and Arizona. Earlier this month, the grocer also acquired six Rio Ranch Market stores in Southern California.

Phoenix-based Sprouts, which employs approximately 31,000 associates at more than 370 stores in 23 states, is No. 53 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.

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