Spartan Stores Inc. and Nash Finch Co. have agreed to merge in an all-stock transaction valued at about $1.3 billion.

Spartan Stores Inc., Nash Finch Co., Alec Covington, Our Family and Nash Brothers Trading Co., Dennis Eidson, Alec Covington, Edward Brunot, Craig Sturken

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Spartan Stores, Nash Finch to merge

August 12th, 2013

GRAND RAPIDS, Mich. – Spartan Stores Inc. and Nash Finch Co. have agreed to merge in an all-stock transaction valued at about $1.3 billion.

The boards of directors of both companies have unanimously approved the deal.

Because it is structured as a merger rather than an acquisition, the deal will create no tax liabilities for shareholders and require no big assumption of debt for the combined company, Nash Finch president and chief executive officer Alec Covington told analysts in a recent quarterly conference call. The deal will result in annual cost savings of about $50 million for the combined company.

The merger will create a grocery wholesale and retail enterprise with pro forma annual sales of about $7.5 billion. The combined company will have 22 distribution centers serving 37 states as well as 177 retail grocery outlets. The company will also be a leading distributor to military commissaries and exchanges in the United States.

Among the combined assets is a strong portfolio of private brands that includes Spartan Stores’ Spartan brand and Nash Finch’s Our Family and Nash Brothers Trading Co.

"This transformational transaction provides a unique opportunity to bring together Spartan Stores’ grocery distribution and retail operations in Michigan, Indiana and Ohio with Nash Finch’s leading position in grocery distribution to military commissaries and exchanges and its complementary wholesale grocery network throughout the U.S.," said Spartan Stores president and chief executive officer Dennis Eidson. "Together, we will create one of the premier grocery wholesaler and retail operators, with a comprehensive portfolio of high-quality private brands, nationwide distribution services and a strong platform for future growth."

Eidson added that combining the resources and expertise of the two companies will create a stronger organization with greater ability to leverage its size, geographic scale and hybrid business model, while its scale will deliver savings in purchasing that will strengthen its ability to serve independent retail customers, military commissaries and exchanges, and retail consumers.

In the combined company, Eidson will take the role of president and CEO, while Alec Covington, president and chief executive officer of Nash Finch, will serve in an advisory role to ensure a smooth transition. Edward Brunot, president of Nash Finch’s military business, will continue in that position in the combined company, while Craig Sturken, chairman of Spartan Stores’ board, will serve as board chairman of the combined company.

Under the terms of the deal, Nash Finch shareholders will receive a fixed ratio of 1.2 shares of Spartan Stores common stock for each share of Nash Finch stock they own.

Upon closing, which is expected by the end of this calendar year, Spartan shareholders will hold around 57.5% of the combined company’s equity while Nash Finch shareholders will own about 42.3%.