Organic food distributor United Natural Foods (UNFI) has bought US grocer Supervalu for $2.9 billion as it aims to expand and diversify its customer base.
UNFI, which is a supplier of Amazon’s Whole Foods Market, said the deal will unlock new opportunities “through a comprehensive product portfolio”.
It is expected the acquisition will allow UNFI to realise run rate cost synergies of more than $175 million within three years.
Supervalu has annual sales of around $14 billion and serves customers across the US with a network of 3,437 stores. Last year it agreed a deal to acquire grocery wholesaler Unified Grocers for around $375 million.
UNFI CEO Steve Spinner said: “This transaction accelerates UNFI’s ‘build out the store’ growth strategy by immediately enhancing our product range, equipping us to bring an attractive, comprehensive product portfolio to an expanded universe of customers.
“Combining our leading position in natural and organic foods with Supervalu’s presence in fast-turning products makes us the partner of choice for a broader range of customers. Together, we can provide our better-for-you products as well as other high-growth segments, improving customers’ competitive advantages in a dynamic marketplace.
“These benefits, plus our increased efficiency and productivity, will enable us to create value for our shareholders, enhance opportunities for our suppliers, provide a broader assortment for our customers and create new prospects for our associates over the long term.”
Supervalu CEO Mark Gross said: “The combination of UNFI and Supervalu provides a substantial premium and delivers certainty of value to our stockholders, meaningful benefits to our customers, expanded opportunities for our employees, and the ability for us and our vendors to efficiently serve a varied customer base.
“We have been executing an ambitious strategic transformation for over two years. We believe that this transaction is the best and natural next step for our stockholders, customers and employees. I am very proud of the unwavering commitment and focus of our employees in driving our strategic transformation and serving our customers. I am confident that, together, Supervalu and UNFI will be well positioned to succeed – and to help our customers succeed – in today’s grocery landscape.”
