SpartanNash is acquiring Caito Foods Service and Blue Ribbon Transport (BRT) for approximately $217.5 million in cash. SpartanNash will acquire Caito’s produce distribution business, fresh cut fruits and vegetables business, its newly constructed Fresh Kitchen facility and the logistics business of BRT.
SpartanNash said the acquisitions will enhance its product offerings by expanding into the fast-growing freshly prepared centerplate and side dish categories.
Founded in Indianapolis in 1965, Caito Foods Service supplies fresh fruit and vegetables to grocery retailers and food service distributors in 22 states in the Southeast, Midwest and Eastern U.S.
Caito and BRT, which generate combined annual revenues in excess of $600 million, currently service customers from facilities in Indiana, Ohio and Florida. Caito also has a central fresh cut fruit and vegetable facility in Indianapolis and is completing construction on the 118,000-s.f. Fresh Kitchen facility, also in Indianapolis. The $32 million Fresh Kitchen will process, cook and package fresh protein-based foods and complete meals. It is expected to be fully operational in the first quarter of 2017. The company offers temperature-controlled distribution and logistics services throughout North America through its affiliate Blue Ribbon Transport.
“We are excited about this opportunity to expand our presence in serving some of the fastest-growing categories in grocery, including fresh produce, value-added fruits and vegetables and protein-based prepared food,” said Dennis Edison, SpartanNash CEO and chairman of the board. “Caito Foods Service is a premier distributor with best-in-class food processing facilities, including its new Fresh Kitchen. In addition, Caito’s service area is complementary to our current distribution footprint, and we look forward to serving customers in new areas in addition to enhancing our offerings to existing customers. In short, this acquisition further strengthens our platform and enhances our ability to help our customers serve their consumers, benefiting our associates and the communities we serve, as well as delivering value for shareholders.”
Caito, BRT execs join SpartanNash
Caito and BRT will become part of SpartanNash’s food distribution segment following the close of the transaction. Caito’s senior leadership team, including Caito President Robert Kirch and Blue Ribbon Transport President David Frizzell, will join SpartanNash upon completion of the transaction. Kirch will report to Dave Staples, SpartanNash president and COO. Frizzell will report to Derek Jones, SpartanNash EVP, president of wholesale and distribution operations. Both will continue in their roles and oversee the acquired operations, which will remain based in Indianapolis.
Kirch said, “With our long history and family tradition of processing and distributing fresh, convenient, healthy foods, we are excited and proud to join an organization that shares our passion and commitment to serve customers with the freshest foods. We are looking forward to joining the SpartanNash family to expand and enhance our combined ability to deliver high quality fresh products efficiently to a greater number of customers across the country.”
SpartanNash also will reimburse Caito for certain transaction costs and provide two earn-out opportunities that have the potential to pay the sellers an additional $12.4 million collectively, if the business achieves certain performance targets. The transaction is expected to be accretive to full year 2017 earnings. The purchase price will be funded with proceeds from SpartanNash’s asset-based lending facility.
SpartanNash expects to close the acquisition by early January, subject to regulatory approval and customary closing conditions.