Upcoming AWS Coverage on Sprouts Farmers Market Post-Earnings Results
LONDON, UK / ACCESSWIRE / April 12, 2017 / Active Wall St. blog coverage looks at the headline from SUPERVALU Inc. (NYSE: SVU) as the Company and Unified Grocers, Inc., announced on April 10, 2017, that they have entered into a definitive merger agreement, pursuant to which, SUPERVALU will acquire Unified Grocers in a transaction valued at about $375 million. SUPERVALU will initially furnish $114 million in cash for 100% of the outstanding stock of Unified and assume another $261 million of Unified Grocer's net debt at closing. Register with us now for your free membership and blog access at:
One of SUPERVALU's competitors within the Grocery Stores space, Sprouts Farmers Market, Inc. (NASDAQ: SFM), announced on April 07, 2017 it will issue financial results for the 13-week first quarter ended April 02, 2017 before the market opens on Thursday, May 04, 2017. Following the release, Sprouts' management will conduct a conference call at 10:00 a.m. ET to discuss the results for the quarter. AWS will be initiating a research report on Sprouts Farmers Market in the coming days.
Today, AWS is promoting its blog coverage on SVU; touching on SFM. Get all of our free blog coverage and more by clicking on the link below:
Details of the Transaction
This transaction is set to unify two highly complementary grocery wholesale organizations, with combined sales of about $16 billion in FY16. SUPERVALU, based in Minneapolis, currently operates 18 distribution centers across the nation and generated sales of about $9.57 billion through the first three quarters of FY16, where 62% of the sales were generated from wholesale distribution.
Unified Grocers, a member-owned distributor, on the other hand, operates six distribution centers serving retailers and regional chains in the areas of California and the Pacific Northwest. Unified Grocers reported net sales of $3.76 billion for FY16, ending last October. The two wholesalers had combined net sales of about $16 billion for FY16, and currently, distribute to about 3,000 retail locations.
Unified Grocers' Portfolio
Unified Grocers currently operates about 4.5 million square feet of warehouse space, according to its most recent 10-K filing with the SEC. The facilities under Unified's portfolio are as follows:
1. A refrigerated warehouse in Santa Fe Springs, California;
2. A bakery manufacturing facility in Los Angeles;
3. A dry grocery warehouse in Commerce, California;
4. A dry grocery and refrigerated warehouse in Stockton, California;
5. A dry grocery and refrigerated warehouse in Milwaukie, Oregon;
6. A dry grocery and refrigerated warehouse in Seattle, Oregon.
Additionally, Unified holds sublease of a facility in Stockton from Raley's Supermarkets, through which, the Company distributes general merchandise and health and beauty care items to Raley's and other potential consumers.
The loss-stricken Company
Unified Grocers, contrary to its exceptional portfolio, has posted a loss in each of the last four fiscal years, including a loss of $3.76 billion in FY16. The Company reported that it has seen its membership decline annually since 2008, where the independents it served, have closed, while other retailers moved to other wholesalers or chose to operate as non-members. Unified had 345 employees at the end of FY16, down from 520 at the end of FY08.
Through the execution of the transaction, SUPERVALU anticipates that the combined business will achieve a run rate of at least $60 million in cost synergies. The synergies will be primarily derived from utilizing scale and expertise of the combined Company as well as the consolidation of select back office functions. In an attempt to achieve these synergies, SUPERVALU expects to incur transition and integration costs of up to $60 million within the first two years, following the completion of the transaction.
The transaction is expected to be accretive to SUPERVALU's EPS, excluding the transaction and integration costs as well as potential purchase accounting adjustments, in FY18, which begins on February 25, 2018.
SUPERVALU Growth Prospects
Last December, SUPERVALU announced the sale of its Save-A-Lot business to an affiliate of Onex Corporation, for about $1.365 billion in cash. This agreement is set to add leading West Coast focused wholesale grocery and specialty distributor to SUPERVALU's existing distributing network. SUPERVALU will use its cash on hand and borrowings under its credit facilities to purchase Unified's equity and repay Unified's outstanding debt, offering SUPERVALU to focus on growing its customer base while efficiently delivering best in class wholesale services aimed at enhancing customer's competitiveness.
At the close of trading session Tuesday, April 11, 2017, SUPERVALU's stock price rose 5.54% to end the day at $4.00. A total volume of 15.94 million shares were exchanged during the session, which was above the 3-month average volume of 4.18 million shares. The Company's share price has surged 21.58% in the past one month. The stock is trading at a PE ratio of 16.53 and currently has a market cap of $1.08 billion.
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SOURCE: Active Wall Street