The gourmet grocery chain Fresh Market has agreed to a $1.36 billion takeover by Apollo Global Management, ending a six-month strategic review with a deal that is a 24 percent premium to its closing stock price Friday.
Ray Berry, the chain’s founder, and his son Brett Berry, who collectively own 9.8 percent of the shares, won’t sell any of their shares in the deal but instead roll their investment into the Apollo funds. The deal, announced Monday, includes a co-investment from George Golleher, former chief executive of Smart & Final and Ralphs Grocery Co./Food-4-Less.
Specialty grocers have been pressured by national chains like Wal-Mart and Kroger and such rivals as Whole Foods and Trader Joe’s. Two years ago, the private equity firm Cerberus Capital Management struck a $9 billion deal to acquire the grocery chain Safeway, which it merged with Albertsons.
Fresh Market, which is based in Greensboro, operates 186 stores in 26 states, including 22 stores in North Carolina. Apollo has a track record of owning such retailers. It previously owned Sprouts Farmers Market, an organic food specialty chain, Hostess Brands, General Nutrition Centers and Smart & Final.
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“We are excited about this transaction with Apollo, which recognizes the value of the Fresh Market’s strong brand and significant growth prospects while providing stockholders with an immediate and substantial premium,” said Rick Anicetti, the grocer’s president and chief executive.
Apollo is paying $28.50 in cash for each share of Fresh Market. The deal includes $800 million in debt and a $525 million equity stake by Apollo funds. The transaction is scheduled to close in the second quarter.
Fresh Market shars closed Monday at $28.39, up $5.41.
Fresh Market sold shares to the public for the first time six years ago, at the beginning of an expansion into the California market. Anicetti, a former chief executive of Food Lion, joined Fresh Market in September.
By October, the firm had announced it was undertaking a strategic review, including the possibility of a sale.
Rumors of a pending deal have been circulating for weeks. Ray Berry didn’t participate in the board discussions about the review and from the board vote to approve the Apollo deal, the company said Monday.