United Natural Food Inc. announced plans to acquire Millbrook Distribution Services in a move the companies say will provide UNFI's natural foods customers a greater selection of specialty food products and give Millbrook's conventional grocery customers more natural and organic choices.
Terms of the transaction, expected to close by early November, were not disclosed.
"Our natural foods customers are interested in carrying more specialty products that have the right ingredient profile, which is probably about 15 to 20 percent of the specialty products out there," said UNFI chief executive Michael Funk.?
Millbrook distributes more than 22,000 ethnic, kosher, gourmet, organic and natural food products and 20,000 health and beauty products and non-food items to 9,000 independent retailers and chain supermarkets, drug and mass merchandise stores. The Leicester, Mass., company is a privately-held subsidiary of Distribution Holdings Inc. with annualized revenues of more than $300 million.
UNFI of Dayville, Conn., reported 2006 revenues of $2.4 billion and distributes about 40,000 products to 17,000 retailers and food service providers nationwide.
With the increased size and scope of its distribution network, UNFI hopes to gain efficiencies that result in greater value for its customers, Funk said. The merger is consistent with UNFI's goals to grow profitably, boost its competitive advantage and increase shareholder value.
"The initial result of this is that supermarkets will be able to buy more natural and organic products through the Millbrook division," said Funk, noting UNFI already carries all of the naturals and organics in Millbrook's line up (a 15 percent overlap). "For the natural customer base, there's no change at all, other than the fact we'll have more specialty items for them to choose from."
UNFI's and Millbrook's products will be integrated one region at a time, starting with the southeast, he said.
Bob Sigel, Millbrook's president and chief executive officer, will continue to lead Millbrook operations under UNFI. Millbrook employs more than 1,300 people and operates distribution centers in Leicester; New Brunswick, N.J.; Harrison, Ark.; and Tampa, Fla.
The transaction is subject to customary regulatory approvals.