SpartanNash has agreed to acquire certain assets of Indianapolis based Caito Foods Service and its Blue Ribbon Transport (BRT) logistic operations for approximately $217.5m.
Additionally, SpartanNash will bear certain transaction costs for Caito besides providing a couple of earn-out opportunities that can pay the sellers an additional $12.4m if the business attains certain performance targets.
The Michigan based food distributor and grocery store retailer would raise the acquisition amount from the proceeds of its asset-based lending facility.
Through the acquisition, SpartanNash is expecting to strenghten its product offerings by expanding into the freshly prepared centerplate and side dish categories.
According to the terms of the deal, SpartanNash will acquire Caito’s produce distribution business, fresh cut fruits and vegetable business. It will also acquire Caito’s new $32m Fresh Kitchen facility, which will process, cook and package fresh protein-based foods and complete meals.
The new 118,000sq2 facility is expected to fully operational in the first quarter of 2017.
SpartanNash CEO and board chairman Dennis Edison said: “Caito Foods Service is a premier distributor with best-in-class food processing facilities, including its new Fresh Kitchen. In addition, Caito’s service area is complementary to our current distribution footprint, and we look forward to serving customers in new areas in addition to enhancing our offerings to existing customers.”
The acquisition, which is subject to regulatory approval and customary closing conditions, is expected to be closed by early January 2017. Following it, Caito and BRT will be absorbed in SpartanNash’s food distribution segment.
Post acquisition, Caito’s senior leadership team including its president Robert Kirch and Blue Ribbon Transport president David Frizzell will join SpartanNash.
Caito supplies fruit and vegetables to grocery retailers and food service distributors in 22 states across the Southeast, Midwest and Eastern regions in the US. Together with BRT, it generates annual revenues of more than $600m.
While Deutsche Bank acted as financial advisor to SpartanNash in the transaction, Morgan Lewis was the legal counsel.