SUPERVALU Announces Acquisition of Richfood; Combination Expected to be Accretive to SUPERVALU's Current Fiscal Year Earning Per Share
MINNEAPOLIS and RICHMOND, Va., June 9 /PRNewswire/ -- SUPERVALU INC. (NYSE:
SVU) and Richfood (NYSE: RFH) announced today the acquisition of Richfood by SUPERVALU. In
what both companies describe as "a powerful combination," the acquisition will consolidate Richfood,
the premier regional food distributor, into SUPERVALU's national network, and, significantly, brings to
SUPERVALU a major food retailing presence in the Mid-Atlantic with nearly $1.8 billion in retail food
sales. The acquisition increases SUPERVALU's geographic reach as the nation's leading food
distributor to supermarkets across America and elevates SUPERVALU retail operations to the 10th
largest supermarket retailer in the United States. Following the acquisition, SUPERVALU's annual retail
food sales will increase by 35 percent, from $5 billion to $7 billion. The boards of directors of both
companies have approved the acquisition. The completion of the transaction is subject to a number of
conditions, including approval by Richfood's shareholders and regulatory clearance.
Under the terms of the definitive merger agreement, in which Richfood will be merged into a subsidiary
of SUPERVALU, Richfood's shareholders will have the option to receive $18.50 per share in cash or
SUPERVALU common stock, subject to a 50/50 allocation and proration. The transaction, which is
expected to close in the third quarter of the current fiscal year, has a total value of $1.5 billion, including
the assumption of Richfood's $642 million of debt.
The transaction is expected to be immediately accretive in the current fiscal year ending February 2000,
and significantly accretive in the following years, excluding anticipated one-time charges related to the
transaction. The company estimates that the transaction will be accretive by $.03 to $.06 per share and
$.12 to $.16 per share in the fiscal years ending February 2000 and 2001 respectively, before one time
charges related to the transaction of approximately $10 million to $15 million after-tax and assuming a
third quarter fiscal 2000 closing date. SUPERVALU expects to achieve annual synergies totaling $40
million by the fiscal year ending February 2003 with at least $25 million occurring in the first full fiscal
year from purchasing leverage, volume efficiencies and cost reductions.
SUPERVALU chairman and CEO Mike Wright said, "This is an outstanding combination for the
shareholders, customers and employees of both SUPERVALU and Richfood. Richfood is a leader in
the Mid Atlantic in both distribution and retail and represents an excellent strategic fit for our company.
We have tremendous respect for all of Richfood's accomplishments and their excellent track record of
growth."
Wright continued, "The acquisition of Richfood fits perfectly with SUPERVALU's two key strategies
which are to drive distribution industry consolidation and to aggressively grow our retail supermarket
business. By acquiring Richfood, we are enhancing our own industry leading distribution network with
Richfood's highly productive operations and building a great platform for growth in the Mid-Atlantic.
Furthermore, we are aggressively growing our retail supermarket business with the addition of Shoppers
Food Warehouse, Metro and Farm Fresh. These supermarkets operate in growing market areas where
we don't currently have a presence. The stores are a natural fit with our price superstores, Cub Foods
and Shop 'n Save."
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