Food distributor making $217M acquisition
A local food distributor has reached an agreement to acquire “certain assets” of a food supplier serving 22 states.
Byron Center-based SpartanNash said today it has entered into a definitive agreement to acquire several assets from Indianapolis-based Caito Foods Service and its “affiliate” Blue Ribbon Transport for about $217.5 million in cash.
Caito Food Service and Blue Ribbon Transport generate combined annual revenues in excess of $600 million.
The acquisition is “subject to regulatory approval and customary closing conditions," and SpartanNash expects the deal to close by early January 2017.
SpartanNash said the acquisition strengthens its offerings and expands the company’s footprint into the “fast-growing freshly prepared centerplate and side-dish categories.”
“We are excited about this opportunity to expand our presence in serving some of the fastest-growing categories in grocery, including fresh produce, value-added fruits and vegetables and protein-based prepared food,” SpartanNash CEO and Chairman Dennis Eidson said.
SpartanNash will acquire Caito’s produce distribution business, fresh cut fruits and vegetables business, the newly constructed Fresh Kitchen facility and the logistics business of Blue Ribbon Transport.
The $32-million Fresh Kitchen will process, cook and package fresh protein-based foods and complete meals. The 118,000-square-foot facility, located in Indianapolis, is expected to be fully operational in the first quarter of 2017.
Caito Food Service and Blue Ribbon Transport will become part of SpartanNash’s food distribution segment. Caito’s senior leadership team will join SpartanNash.
SpartanNash agreed to purchase assets from Caito for about $217.5 million, in addition to reimbursing Caito for transaction costs. Additionally, SpartanNash is providing a pair of earn-out opportunities that could pay the sellers an additional $12.4 million if the business hits certain performance targets.
The transaction is expected to be accretive to full-year 2017 earnings, and the purchase price will be funded from SpartanNash’s asset-based lending facility.
Caito Food Service supplies fresh fruits and vegetables, fresh-prepared meals and fresh floral products to retailers and distributors in 22 states via its distribution centers in Indiana, Ohio and Florida.
Caito’s Blue Ribbon Transport operations supply internal temperature-controlled distribution and logistics services throughout North America.
The company was founded in 1965 by brothers Philip J. Caito IV and Joseph A. Caito.