Supervalu buying West Coast grocery chain

Published on
April 12, 2017

Supervalu, one of the largest wholesalers and retailers in the United States, will acquire distributor Unified Grocers for around USD 375 million (EUR 353.5 million).

The two grocery wholesalers had combined sales of approximately USD 16 billion (EUR 15.1 billion) in 2016. Together, Eden Prairie, Minnesota-based Supervalu and Commerce, California-based Unified operate 24 distribution centers, supplying more than 3,000 stores in 46 states.

The transaction is expected to close in mid-to-late summer, when Unified will become a wholly-owned subsidiary of Supervalu.

“By acquiring the Unified business, including gaining a wealth of expertise and talent, we will become a stronger and more efficient organization. The transaction will enhance our ability to help our customers better compete in the evolving grocery industry,” Supervalu President and CEO Mark Gross said.

By the end of the third year of operations after the transaction is completed, the combined business will achieve a run rate of at least USD 60 million (EUR 56.6 million) in cost synergies, according to Supervalu. 

“These synergies will be primarily derived from utilizing the scale and expertise of the combined company, as well as consolidation of select back office functions,” the company said in a statement.

However, to achieve the synergies, Supervalu expects transition and integration costs of up to USD 60 million (EUR 56.6 million) within the first two years.

The combined company will help its “customers compete in an increasingly demanding grocery environment,” Supervalu said. “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 retail 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, Supervalu “will maintain an important and visible presence” in Commerce, California, Unified’s headquarters, and throughout the West Coast, including management and employees of the combined company, it said.

Contributing Editor

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