Nash Finch To Be Acquired In $1.3 Billion Deal

Nash Finch To Be Acquired In $1.3 Billion Deal

Edina-based Nash Finch agreed to an all-stock merger with fellow food distributor Spartan Stores, a deal that is expected to create a $7.5 billion company.

Edina-based Nash Finch Company, one of Minnesota’s 20 largest public companies, said Monday that it will merge with grocery distributor and retailer Spartan Stores, Inc., which is based in Grand Rapids, Michigan, in a deal valued at $1.3 billion.
 
The combination of the two companies will create a grocery wholesale and retailer operator with annual sales of about $7.5 billion. The merged company will have 22 distribution centers covering 37 different states and 177 retail stores, Nash Finch said.
 
The companies stated that the combined entity will “retain a presence” in both Minneapolis and Grand Rapids. A company spokeswoman said the location of the new corporate headquarters has not been officially chosen.
 
Nash Finch distributes food to conventional supermarkets and military commissaries and employs about 7,500 people. The company’s revenue totaled $4.8 billion at the end of its most recent fiscal year.
 

Spartan Stores owns and operates 101 supermarkets in Michigan and supplies 390 independent grocery locations in Michigan, Ohio, and Indiana. The company currently employs more than 8,700, and its revenue totaled $2.6 billion in its most recent fiscal year.
 
Under the terms of the transaction, Nash Finch shareholders will receive 1.2 shares of Spartan Stores common stock for each share of Nash Finch that they own.
 
The deal remains subject to closing conditions but is expected to close by the end of 2013. Spartan Stores’ shareholders will own about 57.7 percent of the equity of the combined company and Nash Finch shareholders will own about 42.3 percent.
 
“By combining our resources, expertise, and talent, we will become a stronger and more efficient organization with an enhanced ability to leverage our size, geographic reach, and hybrid business model to better compete in the evolving grocery industry,” Spartan Stores President and CEO Dennis Eidson said in a statement.

Nash Finch would not disclose whether it will retain its name or assume Spartan Stores’ title. The combined company will, however, continue to feature private brands from both companies: Spartan Stores’ “Spartan” brand and Nash Finch’s “Our Family” and “Nash Brothers Trading Company” brands.
 
According to the companies, the Minneapolis and Grand Rapids offices will include members of each company’s management teams and employee bases. Nash Finch would not disclose further details about possible impacts on employees.

Eidson will serve as president and CEO of the combined company, while Nash Finch President and CEO Alec Covington will remain with the organization in an advisory role during the transition.

“This transaction is consistent with our vision to become the largest and most admired food distributor in the United States,” Covington said in a statement. “The complementary operations and outstanding strategic fit of these two companies create significant value for both companies’ shareholders.”

Nash Finch’s military business will remain headquartered in Norfolk, Virginia, and its president, Edward Brunot, will remain its head. Craig Sturken, chairman of Spartan Stores’ board of directors, will serve as chairman of the combined company’s board of directors, which will comprise seven members designated by Spartan Stores and five by Nash Finch.

The merger is expected to save the companies $50 million annually by the third full fiscal year of operations—due mainly to the consolidation of corporation functions and other “operating efficiencies,” the company said.

Shares of Nash Finch’s stock were trading up about 7.8 percent at $27.40 and shares of Spartan Stores’ were trading up about 8.3 percent at $22.95, during Monday morning trading.

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