SHEBOYGAN, Wis. -- Fresh Brands Inc. has signed a definitive merger agreement to be acquired by an affiliate of the Chicago-based grocery wholesale cooperative, Certified Grocers Midwest Inc., in a transaction valued at approximately $100 million, which includes assumed debt and certain other liabilities.
Under the terms of the merger agreement, each outstanding share of Fresh Brands' common stock will be converted into the right to receive $7.05 in cash. Fresh Brands currently has nearly five million shares of common stock outstanding.
We believe that this merger provides an opportunity for us to further lower our product costs, realize operating synergies and efficiencies and deliver an even more effective value proposition to our franchisees and retail customers, while also providing us with greater financial support and flexibility to grow our business in the future, said Louis Stinebaugh, Sheboygan, Wis.-based Fresh Brands' president and COO.
Ken Koester, president and CEO of Certified, said, The acquisition of Fresh Brands provides many opportunities to strengthen both organizations. Certified is looking forward to working with the associates of Fresh Brands because both organizations are dedicated to providing independent supermarket operators with excellent service at a low cost. We are owned by successful independent supermarket operators and believe that the enhanced buying power and other benefits of the merger will provide great value and opportunities to the Fresh Brands franchisees as well as the independent supermarket operators that we serve.
The proposed merger is expected to be completed in the first quarter of 2006. The transaction is subject to approval by Fresh Brands' shareholders and other customary closing conditions. The transaction is not subject to a financing contingency and the obligations of Certified's affiliate to pay the merger price to Fresh Brands' shareholders upon the closing of the merger have been guaranteed by Certified. A commitment letter for $115 million of financing has been obtained by Certified from a bank syndicate led by J.P. Morgan Chase to provide, subject to customary conditions, all necessary debt financing to fund the transaction and to provide funds for the ongoing operation of the businesses.
William Blair & Co. LLC, Chicago, served as financial advisor to Fresh Brands' board and provided the board with a fairness opinion.
Fresh Brands, Inc. is a supermarket retailer and grocery wholesaler through corporate-owned retail, franchised and independent supermarkets. The corporate-owned and franchised retail supermarkets currently operate under the Piggly Wiggly and Dick's Supermarkets brands. Fresh Brands currently has 74 franchised supermarkets, 20 corporate-owned supermarkets and two corporate-owned Pig Stop convenience stores with gasoline, all of which are served by two distribution centers and a centralized bakery/deli production facility. Supermarkets are located through Wisconsin, northern Illinois and Iowa.
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