Smart & Final, which is backed by Apollo Management, has agreed to sell its Henry’s Farmers Market unit to Sprouts Farmers Market. Financial terms weren’t announced. Apollo will be majority owner of the combined Sprouts-Henry company.
Smart & Final Stores LLC today announced that an agreement has been reached by Smart & Final to sell its Henry’s Farmers Market subsidiary to Sprouts Farmers Market. Private equity firm Apollo Management L.P. (“Apollo”) will be the majority owner of the combined Sprouts-Henry’s company. Apollo will also remain the principal equity owner of Smart & Final.
“The sale of Henry’s provides Smart & Final with a healthy financial return on our 3 1/2 year investment in the Henry’s stores, and the cash proceeds will further deleverage our already strong balance sheet. Smart & Final is a dynamic company with solid growth prospects in each of our store banners,” said Dave Hirz, president of Smart & Final. “With our steady cash flow and an undrawn $150 million revolving credit facility, we have ample liquidity to actively reinvest in our business with a 2011 capital program that includes at least two new stores and over 40 store remodeling projects. I believe the outlook for our company is very positive.”
The proposed transaction is expected to close by the end of the first quarter 2011, and Smart & Final will continue to support its 43 existing Henry’s Farmers Market and Sun Harvest stores with various administrative services for an extended period after closing through a transition services agreement.
As closely held companies, Smart & Final and Sprouts do not disclose financial information. Specific terms of the transaction were not disclosed.
Originally founded in 1871 in downtown Los Angeles, Smart & Final Stores LLC operates approximately 250 retail stores, excluding the Henry’s & Sun Harvest banners. Under the Smart & Final, Smart & Final Extra!, Smart Foodservice Cash & Carry and SmartCo Foods banners, the company operates non-membership warehouse stores for food and foodservice supplies in California, Oregon, Washington, Arizona, Nevada, Idaho and northern Mexico. For more information, visit the company’s website at www.smartandfinal.com.