United Natural Foods to buy Supervalu for $1.26 billion

Published 10:31 pm Thursday, July 26, 2018

United Natural Foods is buying Supervalu for $1.26 billion, creating a grocery food wholesaler with a diverse customer base.

United Natural Foods of Providence, Rhode Island, said Thursday it’s paying $32.50 per share in cash, or a premium of 67 percent, for each share of Supervalu Inc. Including the assumption of debt, the deal is valued at nearly $3 billion.

Over time, the company will divest Supervalu’s retail operations, which operate under names including Cub Foods and Hornbacher’s.

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The combined company expects to generate more than $175 million in savings by the third year after closing.

“With extremely thin margins at Supervalu and organic growth opportunities hard to come by due to the challenging business environment for its wholesale distribution customers, which are primarily independent food retailers or small retail grocery chains that are challenged the most in the current promotional environment,” said Moody’s Vice President Mickey Chadha, “it makes sense to join forces with UNFI which has over 35 percent of its sales to grocery stores that specialize in faster growing natural and organic foods, including Whole Foods.”