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Major announcement during SuperValu's 2018 National Expo

ST. PAUL, MN — In the midst of its 2018 National Expo at the RiverCentre here, SuperValu announced that it is being purchased by organic foods specialist United Natural Foods Inc., based in Providence, RI, in a $2.9 billion deal. UNFI distributes more than 110,000 products to more than 43,000 customer locations throughout the United States and Canada.SHOW-FLOOR

The fifth annual SuperValu National Expo for independent grocery retailers, held July 24-26, drew more than 6,000 attendees and covered 133,000 square feet of exhibit space with more than 600 vendors. In addition to the trade show, education sessions and workshops on industry topics, Chesley “Sully” Sullenberger, captain of US Airways flight 1549 during the Miracle on the Hudson, presented the keynote speech and songwriter Gavin DeGraw headlined the fundraiser for Feeding America. The announcement about SuperValu’s sale came on the last day of the expo.

“I am confident that, together, SuperValu and UNFI will be well positioned to succeed — and to help our customers succeed — in today’s grocery landscape,”said SuperValu’s Chief Executive Officer Mark Gross.

Before its acquisition, SuperValu had a market capitalization of $1.2 billion and produced more than $12 billion in revenue last year. Revenue was expected to rise significantly in 2018 due to its recent acquisition of Associated Grocers of Florida and Unified Grocers.

SuperValu has spent more than two years executing a transformation plan aimed at returning to its wholesale roots while selling off its retail grocers, under the leadership of Gross. But apparently it wasn’t moving fast enough for its shareholders. Investment firm Blackwells Capital LLC in New York purchased a 7 percent position in SuperValu’s shares and initiated a proxy fight, attempting to replace many of the SuperValu board members at the company’s annual meeting. This may have been the catalyst for the sale and shareholders received a break as the stock price rallied more than 60 percent on the merger news.

“The combination of UNFI and SuperValu provides a substantial premium and delivers certainty of value to our stockholders, meaningful benefits to our customers, expanded opportunities for our employees, and the ability for us and our vendors to efficiently serve a varied customer base,” said Gross.

UNFI, which has a market capitalization of $1.7 billion, produced more than $10 billion in revenue during the last fiscal year. The company made the headlines earlier this year after Amazon purchased Whole Foods. UNFI is Whole Foods’ wholesaler and received the benefit of Whole Foods’ increasing sales.

Steve Spinner, UNFI’s chairman and chief executive officer, will lead the combined entity while Sean Griffin, UNFI chief operating officer, will lead the SuperValu integration efforts.

“This combination provides UNFI with significant scale enabling us to serve the country’s most innovative and fastest-growing retailers and e-tailers,” Spinner told analysts on a conference call. “Our industry continues to evolve scale, efficiency, merchandising, services and products selection and are what our customers need and want. This combination is what our retailers demand.”

UNFI will keep SuperValu’s wholesale business, which dates to the 1800s and distributes goods to more than 3,300 grocers in about 40 states, while employing more than 15,000 people. However, UNFI indicated it would continue to exit SuperValu’s retail businesses “in a thoughtful and economically driven manner.”

Analysts believe that Hy-Vee, Kroger, Albertsons, Ahold USA and Overwaitea are all potential buyers for SuperValu’s retail operations, which include 78 Cub Foods stores in Minnesota, 52 Shoppers stores in Washington/Baltimore, eight-unit Hornbacher’s chain in Fargo-Moorhead, and Shop ‘n Save and Farm Fresh chains in the St. Louis area and the mid-Atlantic states.

“Where appropriate, we will separate supply agreements from the sale of the banner in order to more expeditiously move this strategy forward,” said Spinner.

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