Apollo Global adds Fresh Market to shopping cart

Specialty grocery retailer Fresh Market Inc said Monday it agreed to be acquired by private equity firm Apollo Global Management LLC for about $1.36 billion in cash.

Fresh Market, which has a store in Cedar Rapids, said chairman and founder Ray Berry had recused himself from voting on the deal, which was unanimously approved by the board.

Reuters had earlier reported, citing sources, that Berry was himself considering taking the company private.

Berry and his son Brett, who together own about 9.8 percent of Fresh Market's outstanding shares, will not tender their shares into the offer but will participate and roll over the vast majority of their holdings, the company said.

Specialty grocery retailers such as Fresh Market have been struggling to find a niche after being squeezed by Wal-Mart and Kroger on the low end, while Whole Foods, which has many more stores, dominates the top end.

Same-store sales at Fresh Market, which operates 183 stores across 27 states, have declined in the past three quarters.

The acquisition makes strategic sense for both parties, said Neil Saunders, CEO of research firm Conlumino.

For Fresh Market, Apollo will provide the financial muscle and operational maturity to grow into a larger entity. For Apollo, it is an investment that has the prospect of generating good longer-term return, Saunders said.

Apollo's past investments in the U.S. grocery industry include Sprouts Farmers Market and Smart & Final Stores.

George Golleher, a long-term operating partner with Apollo and former Chief Executive of Smart & Final Stores and Ralphs Grocery Company/Food-4-Less, will be a co-investor with the Apollo funds in the deal, the company said.

Fresh Market said it had a 21-day period to solicit superior offers.

Apollo has fully committed financing in place for the deal, which is expected to close in the second quarter, Fresh Market said.