Spartan Stores merges with Nash Finch in $1.3B deal
Grand Rapids-based food distributor Spartan Stores has entered into a merger agreement with Minneapolis-based Nash Finch Company in an all-stock deal valued at approximately $1.3 billion, including debt, that will expand Spartan's distribution area.
Spartan (NASDAQ: SPTN) has grocery distribution and retail operations in Michigan, Indiana and Ohio, while Nash Finch's military commissaries distribution activities are supported by a complementary wholesale grocery network throughout the U.S.
Spartan President and CEO Dennis Eidson said the deal "provides a unique opportunity" to combine the two networks.
Shares of both companies surged on the news.
The combined company will include 22 distribution centers that cover 37 states and 177 retail stores.
It will keep operations in both Grand Rapids and Minneapolis. Nash Finch's military business will continue to be based in Norfolk, Va.
The combined company's private brands will include Spartan's namesake brand, as well as Nash Finch's Our Family and Nash Brothers Trading Company brands.
Nash Finch (NASDAQ: NAFC) stockholders will receive 1.2 shares of Spartan for each share they own. Spartan shareholders will own about 57.7 percent of the combined company, with Nash Finch stockholders owning the remaining 42.3 percent.
Spartan's all-stock purchase is valued at approximately $312 million.
Shares of Nash Finch jumped $2, or 8 percent, to $27.43 in pre-market trading Monday, while Spartan Stores shares rose $1.80, or 8.5 percent, to $23.
Eidson will serve as president and CEO of the company.
Nash Finch President and CEO Alec Covington will serve as an adviser to help with the transition process.
Spartan Chairman Craig Sturken will serve as chairman of the company. The board will include seven directors chosen by Spartan and five chosen by Nash Finch.
Annual savings are anticipated to be approximately $50 million by the third full fiscal year of operations. The acquisition is expected to add to adjusted earnings per share within the first full fiscal year.
Both companies unanimously approved the deal, which is targeted to close by year's end. It still needs the approval of Spartan and Nash Finch shareholders.