Cencosud, a South American retailer, has entered into an agreement with funds managed by an affiliate of Apollo Global Management Inc. to acquire 67 percent of The Fresh Market Holdings Inc.
Founded in 1982 and headquartered in Greensboro, North Carolina, The Fresh Market supermarket chain has 160 leased stores across 22 states, with an average size of 21,000 square feet. Shareholders, including the Apollo Funds, the Berry family and company management, will retain a minority equity interest.
The Fresh Market CEO Jason Potter described Cencosud, a multi-brand retail conglomerate with operations in Argentina, Brazil, Chile, Colombia and Peru, as a “world-class retailer with exceptional margins.”
“The Fresh Market has experienced strong financial momentum over the last few years, and this partnership with Cencosud will allow the company to further capture market share as we expand our footprint in our core Southeast market and beyond,” Potter said. “Our entire team looks forward to the partnership with the Paulmann family, Matias [Videla] and the team at Cencosud.”
The Shelby Report of the Southeast recently honored The Fresh Market as its 2022 Innovator of the Year.
According to a news release, the transaction allows Cencosud to expand its geographic diversity, with about 12 percent of pro forma revenues coming from the U.S. The partnership also provides Cencosud with access to the U.S. markets, where there is a much greater depth of capital markets alternatives.
In addition, the companies will be able to share best practices across their operations, helping to drive increased performance and efficiencies.
Cencosud operates a portfolio of retail segments that includes 915 supermarkets, 108 home improvement and construction stores, 49 department stores and 67 shopping centers and malls. Cencosud was founded in 1976 with the first Jumbo supermarket in Chile and now employs more than 115,000 employees.
The Fresh Market’s board of directors, on which Cencosud will have majority representation, and its management team will continue to operate the business, and shareholders will retain an equity stake in the company.
“The Fresh Market is one of the best supermarkets in the U.S., widely recognized by market specialists and customers alike for its customer-centric culture, excellence in fresh produce and memorable shopping experience in its stores,” said Matias Videla, CEO of Cencosud.
“This unique value proposition is a result of the successful strategy executed and the commitment of a team of highly experienced executives led by Jason and Andy. We are very pleased to make our first investment in the American market through a partnership of the prestige of Apollo Global Management with extensive experience in the retail market. Our team is very excited to start working together to accelerate the growth and value of the company.”
Transaction agreement
Cencosud has agreed to invest U.S. $676 million to buy a combination of primary and secondary equity in The Fresh Market. As a result of the transaction, Cencosud will acquire a 67 percent stake in The Fresh Market, with current shareholders owning the remaining 33 percent.
Cencosud will finance the investment primarily through cash on its balance sheet. Post-closing, Cencosud’s gross leverage will be about 3.1 times and The Fresh Market’s debt will be refinanced to improve its capital structure from an extended maturity and interest rate perspective.
Awards and recognition
* The Fresh Market has been recognized in USA Today’s 10 Best Readers’ Choice polls in 2021 and 2022 as the No. 1 best supermarket in the United States.
* Newsweek and Statista have rated The Fresh Market as the No. 5 for best guest services in grocery in America in 2020.
* Newsweek has also ranked The Fresh Market as a top five most trusted grocery retailer in gourmet foods and natural organic foods.
For more information, visit cencosud.com/en.
