Smart & Final to be Reacquired by Apollo Funds for $1.1B

Smart & Final Stores has entered into a merger agreement with affiliates of New York-based private-equity firm Apollo Global Management in which Apollo Funds will acquire all of the outstanding shares of Smart & Final’s common stock for $6.50 per share in cash. The transaction, which is valued at $1.1 billion, is expected to close in the third quarter of 2019.

Apollo previously purchased the value-oriented food and everyday-staples grocer in 2007 for $812 million, before selling its stake to Los Angeles-based Ares Management in 2012. Smart & Final went public in 2014, with Ares retaining a majority share. With this acquisition, Ares is selling its shares.

“This transaction is the result of diligent analysis and thoughtful strategic deliberations by our board of directors over many months. Our board, with the assistance of independent financial and legal advisors, determined that this transaction, upon closing, will deliver immediate, significant and certain cash value to our stockholders,” said Kenneth Tuchman, chairman of the strategic review committee of Smart & Final's board of directors, who led a strategic-review process.

Smart & Final CEO David Hirz added: “This transaction is a testament to the strength of Smart & Final’s franchise, the quality of our store banners, and the talent and expertise of our people. Under the ownership of the Apollo Funds, Smart & Final will benefit from Apollo's strategic guidance, which will help us accelerate our existing strategy in a dynamic industry environment. We are excited about the future as we embark on a new chapter in our almost 150-year history, with a strategic partner that understands our strengths, culture and customer-centric philosophy. We would like to thank Ares Management for its partnership and support in helping us grow our business to where we are today.”

According to a Reuters report, Apollo plans to divide the company into two separate units due to the difference in operations in the stores. The larger unit, with about 250 discount stores, will operate under the Smart & Final banner and sell directly to consumers without a membership fee. The smaller unit, with more than 60 stores, will operate as Smart Foodservice, a no-frills warehouse that serves mostly restaurants and caterers.

Smart & Final operates more than 300 store locations under its smaller grocery warehouse-store format and the larger-format Smart & Final Extra! banner. The Commerce, Calif.-based company is No. 20 on Progressive Grocer’s 2018 Super 50 list of the top grocers in the United States.