The Fresh Market Sells Majority Stake To South American Retailer Cencosud
South American retailer Cencosud has acquired a majority stake in natural grocery chain The Fresh Market in a $676 million transaction as it looks to expand its business into the U.S.
The news, announced on Wednesday, comes less than a year after the North Carolina-based Fresh Market filed for an IPO for the second time in its 40-year history, only to reportedly file to delay the offering in March due to market volatility from the war in Ukraine.
Cencosud now owns 67% of The Fresh Market, which is valued at almost $1.6 billion in a combination of primary and secondary equity, after entering into a definitive agreement with the retailer’s former majority stakeholder, Apollo Global Management. The deal leaves The Fresh Market’s existing shareholders, including the Apollo Fund, The Berry Family and company management, with a 33% minority stake.
Per terms of the agreement, The Fresh Market’s existing management team will remain unchanged, but Cencosud will gain majority representation on its board of directors. The investment will also go toward strengthening the retailer’s balance sheet by $265 million, according to the release, and once the deal officially closes, the retailer’s debt will be refinanced to improve its capital structure.
“The Fresh Market is one of the best supermarkets in the USA,” said Matias Videla, CEO of Cencosud, in a press release. “Widely recognized by market specialists and customers alike for its customer-centric culture, excellence in fresh produce and memorable shopping experience in its stores. This unique value proposition is a result of the successful strategy executed and the commitment of a team of highly experienced executives.”
The transaction marks Cencosud’s entry into the U.S. where it expects the “traditionally defensive market with a stable currency” to generate approximately 12% of its revenue once the deal closes.
Based in Chile, Cencosud operates over 1,000 retail enterprises spanning supermarkets, home improvement stores, shopping centers and department stores across five countries in Latin and South America. According to the release, Cencosud and The Fresh Market teams believe merging these two businesses will accelerate their expertise as a global grocery leader by collaborating and learning from best practices in their respective markets.
The Fresh Market currently operates 160 stores across 22 states and reported over $1.9 million in revenue last year. Leading up to its filing last year, the specialty retailer made a range of adjustments within its business model, technology and supply chain that led to an uptick in growth, primarily driven by sales of perishable, fresh-focused offerings.
“Cencosud has demonstrated that it is a world-class retailer with exceptional margins, and we look forward to sharing best practices across our businesses,” said Jason Potter, CEO of The Fresh Market, in a press release. “The Fresh Market has experienced strong financial momentum over the last few years and this partnership with Cencosud will allow the company to further capture market share as we expand our footprint in our core Southeast market and beyond. Our entire team looks forward to the partnership with the Paulmann Family, Matias and the team at Cencosud.”
