Strategy

Supervalu Buys Unified to Expand Wholesaling

Unified Grocers gives Supervalu a significant West Coast presence as it continues its shift away from retailing.
Matthew HellerApril 11, 2017
Supervalu Buys Unified to Expand Wholesaling

Supervalu is expanding its wholesale business to the West Coast by acquiring Unified Grocers, a Los Angeles-area food distribution cooperative, for $375 million.

Unified brings $3.8 billion in annual revenue to Supervalu’s existing wholesale business, which had about $8 billion in revenue last year. Supervalu will pay $114 million in cash for all outstanding shares of Unified and assume about $261 million in debt.

“The transaction will enhance our ability to help our customers better compete in the evolving grocery industry,” Supervalu CEO Mark Gross said in a news release.

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“We’re also excited to serve Unified’s dynamic retailer base,” he added. “Unified’s members and customers operate some of the country’s most exciting and progressive Hispanic and multiple other ethnic formats, specialty, gourmet, natural/organic, price impact and traditional stores.”

Supervalu’s distribution business operates mainly in the Midwest and parts of the East and Southeast while Unified is a combination of three West Coast wholesale grocery cooperatives, each of which was founded more than 80 years ago. Unified’s largest customer is Cash & Carry, a Portland, Ore.-based chain of discount warehouse groceries spread over five western states.

Eden Prairie, Minn.-based Supervalu currently has a network of more than 2,000 stores but as the Minneapolis Star Tribune reports, it began to shift its focus away from retailing in 2013 when it sold Albertsons and four other chains. In December, the company completed the sale of its national discount supermarket chain, Save-A-Lot.

Earlier this year, Supervalu posted a surprise third-quarter loss, attributing much of the deficit to its retail business, where revenue declined 3.4% to $1.06 billion. According to the Minneapolis/St. Paul Business Journal, it has been working on new pricing strategies in an effort to battle growing competition.

Unified sells dry grocery goods, frozen foods, meat, eggs and bakery products to its member retailers, as well as supermarkets that are not members. Supervalu said it will aim to expand Unified’s Market Centre division, which provides specialty, ethnic and wellness products.

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