Supervalu to Acquire Associated Grocers of Florida

Supervalu Inc. and Associated Grocers of Florida Inc. have entered into a definitive merger agreement for Supervalu to acquire Associated Grocers for about $180 million.

The deal enables Eden Prairie, Minn.-based Supervalu to expand its operations into a new part of Florida, and bring its products and services to Associated Grocers’ diverse customer base in south Florida, the Caribbean, Central and South America and Asia. Further, as part of the pending transaction, Supervalu has come to a long-term supply agreement with Associated Grocers’ largest customer that will become effective when the deal closes.

Pompano Beach, Fla.-based Associated Grocers is a retailer-owned cooperative that distributes full lines of grocery and general merchandise to independent retailers, mainly in the regions cited above. Its customer base consists of conventional, specialty and ethnic stores. The company operates two distribution centers, has about 650 employees and owns around 1.5 million square feet of real estate. During its last fiscal year, which ended on July 29, its revenues were about $650 million.

“Associated Grocers represents a great opportunity for us to further expand our wholesale business into another important region,” said Supervalu President and CEO Mark Gross. “We believe Supervalu is uniquely positioned to be the supplier of choice across the grocery industry, and this acquisition is another example of how we're delivering on our growth strategy.”

Added Gross: “We’re looking forward to welcoming the strengths and talents of the Associated Grocers team to Supervalu and working together so that, once the transaction is complete, we can bring the benefits of our combined scale and expertise to their customers to help them better compete in the evolving grocery industry.”

“Being a part of Supervalu will provide us with access to resources, products, services and overall capabilities that are essential to helping us continue to provide top-notch support to our customers,” noted Associated Grocers President Christopher Miller. “Supervalu and Associated Grocers share a common dedication and commitment to the independent retailer, and together we’ll be in a great position to provide opportunities, innovation and increased value to our customers, both domestically and in foreign markets.”

The deal, which was approved by the companies’ respective boards of directors, is currently expected to close by the end of calendar year 2017, subject to approval by Associated Grocers’ shareholders and other customary closing conditions. Upon the merger’s completion, Associated Grocers will become a wholly owned subsidiary of Supervalu.

In other Supervalu news, the company reported its second-quarter financials, among which were consolidated net sales of $3.80 billion and a net loss from continuing operations of $25 million, including a $27 million after-tax asset impairment charge and $16 million of after-tax merger and integration costs. Adjusted net earnings from continuing operations came to $18 million, or 46 cents per diluted share.

One of the largest grocery wholesalers and retailers in the United States, with annual sales of about $16 billion, Supervalu serves customers across the country through a network of 3,337 stores comprising 3,120 wholesale primary stores operated by customers serviced by its food distribution business and 217 traditional retail grocery stores operated under five retail banners in six geographic regions. The company has about 31,000 employees.