"This will greatly benefit all of our shareholders, franchisees, employees and vendors," says Louis Stinebaugh, Fresh Brands' president and CEO. "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."
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 4.93 million shares of common stock outstanding.
Ironically, Certified Grocers Midwest was founded in 1940 as a cooperative to buy groceries at the lowest possible price and to permit the founding members to more effectively compete with the chain stores.
But Ken Koester, president and CEO of Certified, says that like his company, Fresh Brands is dedicated to "providing independent supermarket operators with excellent service at a low cost."
The merger is expected to wrap up in the first quarter of 2006. The transaction is subject to approval by Fresh Brands' shareholders. William Blair & Company LLC served as financial advisor to Fresh Brands' board of directors.
Fresh Brands currently has 74 franchised supermarkets, 20 corporate-owned supermarkets and two corporate-owned convenience stores, 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.
Certified Grocers Midwest has assets that include warehousing space in excess of 25 acres, and a fleet of tractors and trailers. Certified's distribution center, located 16 miles west of Downtown Chicago in Hodgkins, has one million sf under one roof, which encompasses the grocery, delicatessen, produce and fresh meat divisions. The frozen food division has a 92,000-sf conventional warehouse, of which 20,000 sf is dedicated to ice cream and bakery frozen items.
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