The $1.1 billion buyout by Apollo of Smart and Final Stores

smart and final buyout

It is Apollo’s most current wager on the brick-and-mortar supermarket industry, even following its last purchase in the area, its $1.4 billion leveraged buyouts of Fresh Market Inc in 2016, has soured amid rising competition.

The stocks jumped in after-hours trading after Reuters reported on the deal before the announcement.

Smart & Final functions 324 groceries and food service shops in California, Oregon, Washington, Arizona, Nevada, Idaho, Montana and Utah.

Ares took Smart & Final people in 2014 at the cost of $12 per share. The shares have lost close to half of their value since then, as the company fought in a challenging environment for brick-and-mortar retailers. Ares currently owns close to 60 per cent of the organisation.

According to Commerce, California, Smart & Final faces competition from direct competitors and e-commerce firms. Inc acquired Whole Foods Market Inc for $13.7 billion in 2017.

Deep-pocketed foreign entrants into the U.S. market such as Lidl and Ahold Delhaize, in addition to discount retailers like Walmart Inc and Dollar General Corp, have also been squeezing Smart & Final’s profitability.

Apollo plans to divide Smart & Final to two operationally separate units, due to their different business model, according to individuals knowledgeable about the matter.

One unit will include the 257 stores operated under the Smart & Final banner ads, which allow consumers to store at a discount with no membership fee.

The next unit will include 67 stores under the business’s Smart Foodservice banner ads, which sell products in a no-frills warehouse format to other food businesses such as restaurants and caterers.