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Supervalu to acquire Florida-based distributor for $180M

SuperValu Inc. said Oct. 18 that it plans to buy distributor Associated Grocers of Florida Inc. for $180 million.

The Minneapolis-based retailer and distributor plans to complete its purchase of Associated Grocers by the end of the 2017 calendar year, the companies said in a joint statement. The deal has already won approval from each company's board of directors but still faces a vote by Associated Grocers' shareholders and customary closing conditions.

When completed, the deal will make Associated Grocers a wholly owned subsidiary of Supervalu, according to the companies' statement.

The transaction will add Associated Grocers' international presence to Supervalu's network. In addition to operations in South Florida, Associated Grocers also distributes groceries and other merchandise to retailers in Asia, the Caribbean, and Central and South America.

"Associated Grocers represents a great opportunity for us to further expand our wholesale business into another important region," Supervalu President and CEO Mark Gross said in the joint statement.

Supervalu also said it has secured a long-term supply deal with Associated Grocers' largest customer, though it did not disclose the name of that customer. The distribution agreement will take effect once Supervalu closes on the broader purchase of Associated Grocers.

For its fiscal year ended July 29, Associated Grocers had revenue of about $650 million, according to Supervalu.

RBC Capital Markets was the financial adviser to Associated Grocers on the deal, while Akerman LLP provided legal counsel to the distributor. Supervalu, meanwhile, retained Faegre Baker Daniels LLP and Cleary Gottlieb Steen & Hamilton LLP as legal counsel, according to the joint statement.