Food Service & Agriculture and Retail

Spartan Stores becomes SpartanNash

November 20, 2013
| By Pete Daly |
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Grand Rapids-based Spartan Stores' giant grocery bags appear at stores and events throughout the region. Photo via fb.com

Spartan Stores and Nash Finch Company have completed their merger after separate shareholder meetings in Grand Rapids and Minneapolis.

Spartan Stores (NASDAQ: SPTN) announced Tuesday that it plans to formally change its corporate name to SpartanNash Company, at the annual shareholders meeting in May 2014.

The combined company will continue to conduct business as Spartan Stores, Nash Finch and MDV in their respective markets, and the common stock of SpartanNash has already begun trading under the symbol SPTN on the NASDAQ stock exchange.

The new SpartanNash logo also appears at the website, spartannash.com.

The new entity did not indicate Tuesday which state its new corporate headquarters will be in.

"This merger brings together two highly complementary organizations to form a leader in the grocery wholesale, retail and military commissary and exchange channels," said Dennis Eidson, president/CEO of Spartan Stores.

More than 99 percent of Spartan Stores shares voting on the proposed issuance of stock to Nash Finch stockholders in the merger voted in favor. At Nash Finch, it was more than 98 percent in favor.

Spartan Stores said that each share of Nash Finch (NASDAQ: NAFC) common stock was converted into 1.2 shares of Spartan Stores common stock. Former Spartan Stores shareholders now own approximately 57.7 percent of the equity of the combined company, and former Nash Finch shareholders own approximately 42.3 percent.

SpartanNash

SpartanNash is now a Fortune 500 company and the largest food distributor serving military commissaries and exchanges in the U.S., in terms of revenue.

The company's core businesses include distributing food to military commissaries and exchanges and independent and corporate-owned retail stores in 44 states and the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt.

SpartanNash operates 177 supermarkets, primarily under the banners of Family Fare Supermarkets, No Frills, Bag 'n Save and Econofoods.

“Cost synergies”

SpartanNash expects that the transaction will create “cost synergies” of approximately $20 million, $35 million and $52 million in fiscal years 2014, 2015 and 2016, respectively.

Integration and closing-related costs of approximately $17 million to $18 million will be recorded in the quarter ended December 28, 2013. Integration costs of $10 million to $11 million, $4 million to $5 million and $1 million to $2 million are expected to be incurred in fiscal years 2014, 2015 and 2016, respectively. The transaction is expected to be accretive to earnings per share, excluding the one-time integration and transaction costs, in fiscal 2014, which will end on January 3, 2015.

SpartanNash has also changed its fiscal year end from the last Saturday in March to the Saturday closest to December 31, resulting in a transition period with a 15-week third quarter this year, versus a 16-week third quarter last year, and a 39-week fiscal year ending December 28, 2013, versus a 52-week fiscal year ending March 30, 2013.

Approximately six weeks of Nash Finch's sales and earnings contributions will be included in Spartan's third quarter and fiscal year results.

The board

SpartanNash's board of directors includes seven directors from Spartan Stores' previous board and four directors from Nash Finch's previous board.

In addition to Craig Sturken, who will serve as chairman, and Eidson, the other members of the board include M. Shan Atkins, Frank M. Gambino, Yvonne R. Jackson, Elizabeth A. Nickels and Timothy J. O'Donovan, former members of the board of directors of Spartan Stores, as well as William R. Voss, Mickey P. Foret, Douglas A. Hacker and Hawthorne L. Proctor, former members of the board of directors of Nash Finch.

Advisors

Moelis & Company acted as Spartan Stores' financial advisor.

Warner Norcross & Judd was Spartan Stores' legal counsel, and Skadden, Arps, Slate, Meagher & Flom LLP acted as counsel for Spartan Stores' board of directors.

Nash Finch's financial advisor was J.P. Morgan Securities Inc. LLC, and its legal advisor was Morgan, Lewis & Bockius LLP. 

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