Supervalu Acquired by United Natural Foods in $2.9B Deal
U.S. grocery retailer Supervalu will sell itself to United Natural Foods in a $2.9 billion deal that includes debt, it said on Thursday, after coming under pressure from some shareholders to explore a sale. United Natural Foods, a distributor of natural and organic foods, offered Supervalu shareholders $32.50 per share in cash, a 67 percent premium to Supervalu's Wednesday closing price. United Natural Foods, the primary supplier for Amazon's Whole Foods Market, said it plans to sell some Supervalu retail assets after the deal. Supervalu's other retail operations today include the 52-store Shoppers chain, which operates in the Washington, D.C., and Baltimore markets, the Shop'n Save brand that has a 40-unit chain in St. Louis and a 22-unit operation in mid-Atlantic states, the 40-store Farm Fresh chain in the Virginia Beach, Va., market, and the eight-unit Hornbacher's chain in the Fargo-Moorhead market on the Minnesota border with North Dakota.
Total Retail's Take: With Amazon's acquisition of Whole Foods Market last summer, consolidation in the grocery space was not to be unexpected. Traditional brick-and-mortar grocers, which Supervalu was not (its roots are as a food wholesaler), are looking for ways to ramp up their digital offerings, and many view M&A as a way of doing so. Furthermore, the fragmented nature of the grocery industry in the U.S., with regional chains scattered throughout the country, provides the opportunity for additional consolidation. Will the future of grocery be one in which smaller online players, including meal kit services, are left competing against traditional big-box chains such as Walmart, Target, Kroger and Whole Foods (Amazon)? We seem to be moving in that direction.
