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Tuesday, March 15, 2016

The Fresh Market (TFM) to be sold to Apollo Global Management (APO)

New York-based private equity firm Apollo Global Management has agreed to purchase The Fresh Market for $1.36 billion, the two companies said Monday.

News of the deal follows weeks of speculation about which of a number of suitors may end up acquiring Greensboro, N.C.-based The Fresh Market (Nasdaq: TFM), a specialty grocery retailer with nearly 200 stores in 27 states.

Among those said to have an interest in The Fresh Market was Cincinnati-based Kroger, with word leaking on Feb. 10 that Kroger was in the second round of an auction process that also attracted other companies and private equity firms. Kroger (NYSE: KR) is the nation’s largest operator of traditional supermarkets.

The cash tender offer puts a value on the company of $28.50 per share, or about 24 percent above what shares closed at last Friday, and more than 50 percent above what they were trading at in early February when speculation began that The Fresh Market might be sold.

The deal with Apollo was approved unanimously by The Fresh Market's board of directors, though Ray Berry, who founded the grocery retailer in 1982 and serves as chairman, recused himself from board discussions about the deal and from the vote on Apollo's offer.

Additionally, The Fresh Market can solicit alternative acquisition proposals through April 1.

The sale of The Fresh Market comes nearly six years after a 2010 initial public offering that was part of the company's plans to aggressively expand nationwide. At the time The Fresh Market went public, it had 95 stores in 19 Eastern and Midwestern states.

Record sales in 2011 were followed by further westward expansion in 2012, a year when the company said it planned to open 16 stores including an entry into California.
By late 2012, shares of The Fresh Market hit a peak of more than $62 and the Berry family and top executives had significantly reduced their stake in the company, with the sale in the middle of that year of a combined 10 million shares.

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