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05/13/2022

Fresh Market Gets a Buyer

South American retailer Cencosud has acquired a majority stake in U.S. grocery chain Fresh Market.
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Cencosud acquired a 67% stake in Fresh Market in a deal valued at $676 million. Fresh Market, based in Greensboro, North Carolina, operates 160 stores in 22 states. The agreement was reached with funds managed by Apollo. 

“Cencosud has demonstrated that it is a world-class retailer with exceptional margins, and we look forward to sharing best practices across our businesses,” Jason Potter, CEO of Fresh Market, said in a statement. “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 [Videla, CEO of Cencosud] and the team at Cencosud.”

Under terms of the deal, existing company shareholders, including the Apollo Funds, the Berry family and company management will retain a minority equity interest in The Fresh Market. Cencosud will finance the investment primarily through cash on its balance sheet. The Fresh Market reported revenue of $1.933 billion in 2021.

The deal expands Cencosud’s geographic diversification with approximately 12% of pro forma revenues coming from the U.S. The deal also provides Cencosud access to the U.S. markets where there is a much greater depth of capital markets alternatives. The retail group plans to bring best practices across its Latin American businesses to The Fresh Market.

"The agreement also establishes the possibility that through legal mechanisms that are practiced in the United States, after a certain period of time, Cencosud Internacional can reach a 100% stake," stated a filing from the Chilean group.

The Fresh Market’s board of directors, which Cencosud will have majority representation on, and its existing management team will continue to operate the business. Existing shareholders will retain an equity stake in the company.

“This unique value proposition is a result of the successful strategy executed and the commitment of a team of highly experienced executives led by Jason and Andy,” Videla, said in a statement. “We are very pleased to make our first investment in the American market through a partnership of the prestige of Apollo Global Management with extensive experience in the retail market.”