Specialty grocery store chain The Fresh Market Inc. (NASDAQ: TFM) has agreed to be acquired by an affiliate of Apollo Global Management LLC (NYSE: APO) for approximately $1.36 billion in an all-cash deal for $28.50 per share. The price reflects a 24% premium to Friday’s closing price and a 53% premium to the price on February 10, when first reports of a possible acquisition were published.
The transaction is expected to close in the second quarter following a tender offer to shareholders. At least 50% of shares must be tendered, not including shares held by Ray and Brett Berry, who together own about 9.8% of the company’s shares. The Berrys will rollover the “vast majority” of their holdings in Fresh Market as part of the transaction.
Apollo noted that financing for the transaction is fully committed, primarily through the incurrence of $800 million in new senior secured notes and an equity contribution of approximately $525 million from funds managed by Apollom in addition to the equity rollover from the Berrys. The Fresh Market will also enter into a new $100 million revolving credit facility concurrently with the closing of the merger.
Andrew S. Jhawar, a senior partner at Apollo, said:
We believe there is a significant opportunity to enhance the brand, merchandise offering and price-value combination to make The Fresh Market a primary destination for food shoppers, while at the same time being committed to social responsibility through partnerships with local vendors and communities. Our team at Apollo has had the tremendous fortune of having executed transactions in several consumables retailers and brands – such as Sprouts Farmers Market, Smart & Final, Hostess Brands and General Nutrition Centers, among others – that have undergone significant transformations under our strategic guidance and we intend to bring that experience to bear at The Fresh Market.
Fresh Market shares closed at $22.98 on Friday, in a 52-week range of $17.81 to $42.07. In Monday’s premarket session, shares traded up nearly 23% at $28.20. Prior to the announcement, analysts had a price target of $25.85 on the stock.
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