Spartan Stores Merging With Nash Finch

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Spartan Stores Merging With Nash Finch

07/22/2013

GRAND RAPIDS, Mich. -- Spartan Stores, operator of 30 Quick Stops throughout Michigan, has entered into a definitive merger agreement with Minneapolis-based Nash Finch Co., a wholesale food distributor.

Under the agreement, Spartan Stores and Nash Finch will combine in an all-stock merger valued at approximately $1.3 billion, including existing net debt at each company.

The combination will create a leader in the grocery wholesale, retail and military commissary and exchange channels with pro forma annual sales of approximately $7.5 billion. Together, Spartan Stores and Nash Finch will have 22 distribution centers covering 37 states, 177 retail stores and will be the leading distributor to military commissaries and exchanges in the United States.

Dennis Eidson, Spartan's president and CEO, said the merger creates "a unique opportunity" to bring together Spartan Stores’ grocery distribution and retail operations in Michigan, Indiana and Ohio with Nash Finch’s leading position in grocery distribution to military commissaries and exchanges and its complementary wholesale grocery network throughout the U.S.

"Together, we will create one of the premier grocery wholesaler and retail operators, with a comprehensive portfolio of high-quality private brands, nationwide distribution services and a strong platform for future growth," said Eidson, who will be president and CEO of the combined company.

"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," he continued. "In addition, the scale of the combined company will provide efficiencies and savings in purchasing and strengthen our ability to serve our independent retail customers, military commissaries and exchanges and retail consumers. At the same time, the combined company will have greater financial flexibility to drive growth, which will provide opportunities for many employees and deliver increased value to shareholders.”

The combined company, which will retain a presence in both Minneapolis and Grand Rapids, will include members of each company’s management teams and employee bases. Nash Finch’s military business will continue to conduct its operations as it has in the past and remain based in Norfolk, Va.

“This transaction is consistent with our vision to become the largest and most admired food distributor in the U.S.," said Alec Covington, Nash Finch's president and CEO, who will remain with the combined organization in an advisory role to help ensure a smooth transition.

"The complementary operations and outstanding strategic fit of these two companies create significant value for both companies’ shareholders," Covington added. "Our shared vision to provide best-in-class services to our wholesale customers and attractive formats for our retail consumers, as well as our continued commitment to serving our nation’s military heroes and their families at home and abroad, creates a powerful platform for growth over the long term."

The combined company is expected to achieve approximately $50 million in annual cost synergies by the third full fiscal year of operations, primarily derived from the consolidation of corporate functions, procurement and other operating efficiencies. Including these synergies, the transaction is expected to be accretive to earnings per share, excluding one-time costs, within the first full fiscal year of operations.

Terms of the transaction have been unanimously approved by the boards of directors of both companies. Nash Finch shareholders will receive a fixed ratio of 1.20 shares of Spartan Stores common stock for each share of Nash Finch common stock they own. Upon closing, which is expected by the end of this year, Spartan Stores shareholders will own approximately 57.7 percent of the equity of the combined company, while Nash Finch shareholders will own approximately 42.3 percent.

Spartan Stores owns and operates 30 Quick Stops throughout Michigan, which are located adjacent to its D&W Fresh Market, Family Fare, Glen’s and VG’s supermarkets. Quick Stops carry bread, milk and other food and beverage items, including deli sandwiches and doughnuts made in the adjacent supermarkets. Customers can combine their fuel stops with grocery shopping and save money in the process.

Spartan Stores also has partnerships with Speedway and Marathon for fuel rewards.

Nash Finch distributes food to military commissaries and exchanges and independent grocery retailers in 37 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt. The company also owns and operates a base of retail stores, primarily supermarkets under the Family Fresh Market, Econofoods, Family Thrift Center, No Frills, Bag 'n Save, Avanza and Sun Mart trade names.