Spartan Stores Inc. and Nash Finch Co. completed their merger. Spartan Stores Inc. will use the corporate name of SpartanNash Co., with the official name change to SpartanNash expected to become effective at the annual shareholders meeting in May 2014. The combined company will continue to conduct business as Spartan Stores, Nash Finch and MDV in their respective markets.
“This merger brings together two highly complementary organizations to form a leader in the grocery wholesale, retail and military commissary and exchange channels,” Dennis Eidson, president and chief executive officer of Spartan Stores, said in a press release. “We would like to thank all of our stakeholders, including our shareholders, associates, customers and suppliers, for their support in completing this significant achievement. We look forward to leveraging our new platform with its broader customer base and geographic reach to create significant long-term value for our shareholders.”
SpartanNash’s Board of Directors includes seven directors from Spartan Stores’ previous board and four directors from Nash Finch’s previous board. In addition to Eidson and Craig Sturken, who will serve as chairman of the board of directors, the other members of the board of directors include M. Shan Atkins, Frank M. Gambino, Yvonne R. Jackson, Elizabeth A. Nickels and Timothy J. O’Donovan (former members of the board of directors of Spartan Stores), and William R. Voss, Mickey P. Foret, Douglas A. Hacker and Hawthorne L. Proctor (former members of the board of directors of Nash Finch).
SpartanNash expects that the transaction will create cost synergies of approximately $20 million, $35 million and $52 million in fiscal years 2014, 2015 and 2016, respectively. Integration and transaction closing related costs of approximately $17 million to $18 million will be recorded in the quarter ended Dec. 28, 2013. Integration costs of $10 million to $11 million, $4 million to $5 million and $1 million to $2 million are expected to be incurred in fiscal years 2014, 2015 and 2016, respectively.
Spartan Stores and Nash Finch shareholders approved the merger during separate shareholder meetings held Nov. 18. Over 99 percent of Spartan Stores shares voting on the proposed issuance of stock to Nash Finch stockholders in the merger voted in favor. Over 98 percent of Nash Finch shares voting on the proposal voted in favor of the merger. Under the terms of the merger agreement, each share of Nash Finch common stock was converted into 1.20 shares of Spartan Stores common stock. Former Spartan Stores shareholders own approximately 57.7 percent of the equity of the combined company and former Nash Finch shareholders own approximately 42.3 percent. The combined company has approximately 38 million shares outstanding.
Along with completing the merger, SpartanNash has changed its fiscal year end from the last Saturday in March to the Saturday closest to Dec. 31. This date change results in a transition period with a 15-week third quarter this year versus a 16-week third quarter last year and a 39-week fiscal year ending Dec. 28, 2013 versus a 52-week fiscal year ending March 30, 2013. Approximately six weeks of Nash Finch’s sales and earnings contributions will be included in Spartan’s third quarter and fiscal year results.
The transaction is expected to be accretive to earnings per share, excluding the one-time integration and transaction costs in fiscal 2014, which will end on Jan. 3, 2015. The combined company also expects to consistently continue to return value to shareholders through a dividend that will initially be set at $0.48 per share on an annualized basis.
Moelis & Co. LLC acted as Spartan Stores’ financial advisor. Warner Norcross & Judd LLP acted as Spartan Stores’ legal counsel and Skadden, Arps, Slate, Meagher & Flom LLP acted as counsel for Spartan Stores’ Board of Directors. Nash Finch’s financial advisor was J.P. Morgan Securities Inc. LLC and its legal advisor was Morgan, Lewis & Bockius LLP.