The acquisition, which is worth US$2.9bn including debt, widens United Natural Food’s range of products to include more traditional foods in addition to its base in natural and organic products and helps the company to gain access to new customers.
“Combining our leading position in natural and organic foods with Supervalu’s presence in fast-turning products makes us the partner of choice for a broader range of customers," United Natural Foods CEO Steve Spinner said in a statement.
Based in Providence, Rhode Island, United Natural has benefited for many years from its long-standing sales relationship with Amazon.com’s Whole Foods.
United Natural Food’s cash offer of US$32.50 per share for each share of Supervalu represents a 67% premium to Supervalu’s closing share price of $19.45 on Wednesday.
On the back of the news, investors sent Supervalu shares up by 64.6% to US$32 in morning trade while United Natural Foods slipped 14% to US$35.36.
Headquartered in Minneapolis, Minnesota, Supervalu has come under pressure for several months from an activist investment firm Blackwells Capital LLC to radically change its business. Its shareholders were expected to vote on another slate of alternative board members which Blackwells had put forth next month, according to the Wall Street Journal.
United Natural will fund its takeover of Supervalu with debt. Its CEO Steve Spinner will take charge of the combined company while Sean Griffin, the company’s chief operating officer, will oversee the merger of the two companies.
Separately, Supervalu posted a fiscal first-quarter net loss Thursday of US$27mln or US$0.55 per share, down from a profit of US$9mln, or $0.30 per share in the year-ago period.