United Natural Foods to Buy SuperValu for $2.9 Billion

United Natural Foods, Whole Foods’ biggest supplier, announced on Thursday that it will be acquiring SuperValu, a grocery industry leader, for $2.9 billion.

The company will be paying $32.50 a share for SuperValu, representing a 67% premium from the stock’s closing price on Wednesday.

Whole Foods accounts for roughly 33% of United Natural Food’s business.

Shares of SuperValu jumped over 65% on the news while United Natural Food’s saw its shares plunge over 16%.

UNFI intends to off SuperValu’s retail assets in order to reduce leverage.

“This transaction accelerates UNFI’s “Build out the Store” growth strategy by immediately enhancing our product range, equipping us to bring an attractive, comprehensive product portfolio to an expanded universe of customers,” commented Steve Spinner, UNFI’s Chief Executive Officer and Chairman.

“Combining our leading position in natural and organic foods with SUPERVALU’s presence in fast-turning products makes us the partner of choice for a broader range of customers. Together, we can provide our “better for you” products as well as other high-growth segments, improving customers’ competitive advantages in a dynamic marketplace. These benefits, plus our increased efficiency and productivity, will enable us to create value for our shareholders, enhance opportunities for our suppliers, provide a broader assortment for our customers and create new prospects for our associates over the long term,” added Spinner.

“The combination of UNFI and SUPERVALU provides a substantial premium and delivers certainty of value to our stockholders, meaningful benefits to our customers, expanded opportunities for our employees, and the ability for us and our vendors to efficiently serve a varied customer base,” said Mark Gross, SUPERVALU’s Chief Executive Officer.

He continued, “We have been executing an ambitious strategic transformation for over two years. We believe that this transaction is the best and natural next step for our stockholders, customers and employees. I am very proud of the unwavering commitment and focus of our employees in driving our strategic transformation and serving our customers. I am confident that, together, SUPERVALU and UNFI will be well positioned to succeed – and to help our customers succeed – in today’s grocery landscape.”

Disclaimer: We have no position in United Natural Foods Inc. (NASDAQ: UNFI) nor SUPERVALU INC. (NYSE: SVU) and have not been compensated for this article.