UNFI closes purchase of distributor Supervalu

Acquisition give nation’s largest organic food distributor more products, more customers and more distribution centers.

October 23, 2018

3 Min Read
UNFI closes purchase of distributor Supervalu

United Natural Foods Inc. has closed on its $2.9 billion acquisition of Supervalu Inc., the distributor of organic and natural foods announced Monday.

Already the largest such distributor in the country, UNFI adds more traditional foods, as well as a larger geographic area to its offerings.

More than 80 percent of Supervalu shareholders approved the sale to UNFI in a vote last week, according to the Minneapolis Star Tribune. Supervalu was removed from the New York Stock Exchange before the market opened today. The company’s stock was first listed in 1967.

“Today is an important milestone for UNFI. We will take the best from both businesses to create North America's premier food wholesaler with significant scale, reach and choices for our customers,” Steve Spinner, UNFI's chairman and chief executive officer, said in a released statement. “We are pleased to welcome our new colleagues from Supervalu as well as their customers and suppliers to UNFI.  Our companies share customer-centric cultures and dedicated associates who are committed to continuous improvement, which will help drive our integration programs.”

Spinner announced in July that UNFI was going to acquire Supervalu; during September’s earnings call, he said the transaction would close before the end of the year. Goldman Sachs financed the transaction, which included assuming Supervalu’s outstanding debts.

“We are excited to continue to further build out the store to a more diverse customer base across the country, with both broad better-for-you natural, organic brands and fresh perimeter offerings, as we capitalize on opportunities to cross-sell and realize the benefits of the greater scale we now have as a combined company,” said Sean Griffin, chief executive officer of Supervalu and head of the integration committee. Previously, Griffin was UNFI’s chief operations officer.

The integration committee, which includes executives from both companies, will decide and implement the best practices from each company will be expanded. Supervalu executives Anne Dament, executive vice president of retail, marketing and private brands, and Mike Stigers, executive vice president of wholesale, will report to Griffin, according to UNFI’s statement.

UNFI expects to see $175 million savings through cost synergies by year three and $185 million in year four, company officials have repeatedly said.

“We believe that we can achieve these targets and leverage scalable systems to streamline our processes, more efficiently meet the needs of our customers and reduce future capital expenditures,” Griffin said.

With the acquisition complete, UNFI will operate at least 60 distribution centers, including those in seven states where it did not have any: Montana, North Dakota, Illinois, Virginia, Mississippi, Alabama and Florida.

UNFI is increasing its product offerings with meat, produce, private-label frozen foods and deli items as a result of the Supervalu deal. Also, UNFI projects having more than $20 billion in net sales in the first year and offering about 250,000 SKUs to about 45,000 customers. During fiscal year 2018, which ended July 28, UNFI had net sales of $10.23 billion, a company record and a 10.3 percent increase from fiscal 2017.

In addition to its distribution network, Supervalu owned, franchised or operated more than 3,000 stores nationwide, including Cub Foods. Supervalu has sold 19 Shop ’n Save stores in the St. Louis, Missouri, area to Schnuck Markets; 16 remaining locations in Missouri and near Springfield, Illinois, are scheduled to close Nov. 19, Supermarket News reported. More than 100 supermarkets remain, which UNFI plans to sell. 

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