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Supervalu in $375 million acquisition

BY Marianne Wilson

Supervalu Inc. has entered into a deal that will expand its wholesale business into the West Coast.

The company announced it will acquire Unified Grocers, a California-based wholesale grocery distributor, for approximately $375 million.

The transaction, expected to close in mid-summer, brings together two complementary grocery wholesale organizations with combined sales of approximately $16 billion in 2016. The combined company will operate 24 distribution centers supplying customers in 46 states with a combined customer base of over 3,000 stores.

By the end of the third year of operations, the combined business will achieve a run rate of at least $60 million in cost synergies, according to Supervalu, while will be primarily result from utilizing the scale and expertise of the combined company as well as consolidation of select back office functions. The company expects to incur transition and integration costs of up to $60 million within the first two years following the completion of the transaction.

“By acquiring the Unified business, including gaining a wealth of expertise and talent, we will become a stronger and more efficient organization,” said Mark Gross, president and CEO, Supervalu. “The transaction will enhance our ability to help our customers better compete in the evolving grocery industry. We’re also excited to serve Unified’s dynamic retailer base.”

The acquisition also provides new growth opportunities across multiple geographies, including the expansion of Unified’s Market Centre division, a growing business providing specialty and ethnic products to independent customers.

“Unified’s members and customers operate some of the country’s most exciting and progressive Hispanic and multiple other ethnic formats, specialty, gourmet, natural/organic, price impact and traditional stores,” Gross said. “They complement our existing customer base and we look forward to facilitating collaboration and innovation across such an impressive collection of creative merchants.”

Following the completion of the transaction, Eden Prairie, Minnesota-based Supervalu will maintain a visible presence in Unified’s headquarters in Commerce, California, and throughout the West Coast, including management and employees of the combined company.

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