What Will It Take to Close Apollo’s Deal with The Fresh Market?
Why Was The Fresh Market Ready for Apollo's Acquisition Offer?
More about the Apollo deal with The Fresh Market
As we saw in the first part of this series, The Fresh Market (TFM) accepted a buyout offer from Apollo Global Management (APO) this morning. It’s an all-cash offer of $28.50 per share. The deal, if successful, is expected to close in the second quarter of 2016.
While talking about the deal, Rich Noll, The Fresh Market’s lead independent director, commented, “We are pleased to have reached this agreement with Apollo, which follows a comprehensive review of strategic and financial alternatives that generated interest from numerous parties. After an open and thorough process, our Board concluded that this offer maximizes value for our stockholders.”
What still needs to happen?
In order for the Apollo–Fresh Market deal to be completed, the companies have to satisfy the minimum tender condition. It requires more than 50% of TFM common shares, excluding the shares of Ray and Brett Berry, to be tendered. In addition, it has to have approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and satisfy other customary closing conditions.
The deal has been unanimously approved by TFM’s board of directors, except Ray Berry, chairman and founder of The Fresh Market. Berry didn’t participate in discussions about the review and stayed away from the board’s vote that approved the transaction. Ray Berry and Brett Berry, who collectively own approximately 9.8% of TFM’s outstanding shares, will not tender their shares into the tender offer. Both of them will participate and roll over the majority of their holdings into the transaction with Apollo.
About The Fresh Market
The Fresh Market, based in North Carolina, operates as a specialty grocery retailer in the United States. As of October 25, 2015, the company operated 180 stores in 27 states across the country. The company has been facing deceleration in traffic and sales. Larger grocery chains and mass merchandisers such as Kroger (KR), Walmart (WMT), and Costco (COST) are jumping on the organic food bandwagon, which has affected TFM.
The SPDR S&P Retail ETF (XRT) has ~1% exposure to TFM. The Barron’s 400 ETF (BFOR) has a 0.27% exposure to the company.
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