UNFI & Supervalu...A Complex Coming Together leaves The Industry Wondering...Why These Two Companies...Why Now?
Is This Union An Incredible Opportunity Or Just the Loss Of Another Grocery Wholesaler?
The most realistic view point is obviously this makes one less independent grocery wholesaler available to the retail supermarket community. However, is this the beginning of a greater good for retail food? Perhaps different programs available to a healthier lifestyle oriented consumer?
It would seem Supervalu with all of its retail programs had seemingly hit a wall for organic retail food growth. Most if any real dollar volume growth was from a list of acquisitions since Mark Gross took the helm as president.
Both market share and market cap had been a struggle. The stock would rise and fall unpredictably and the multiple of earnings was always in question. In short, even when the forward looking statements from Supervalu were positive Wall Street really never bought in and lets forget any possibility of a reasonable dividend from this stock.
In Steps Blackwells Financial In The Supervalu Mix...An Activist Investor
This general lack of opportunity or excitement for Supervalu investors became an opportunity for an activist type investor. With that, in stepped Blackwells. Blackwells had the back round, the money and as with most investment companies a desire to make money sooner than later.
With "Blackwells" involved as an activist investor Supervalu was in a pickle where these investors expected results and in reality Supervalu investors got the results they were looking for. Blackwells sought to change the board of directors and take more corporate control. Blackwells viewed Supervalu and its plan as less than perfect for wholesale growth.
"Supervalu Stockholders Find A Successful Ending"
Supervalu, previously with a market cap less than a billion dollars was acquired for $2.9 billion dollars with the UNFI transaction. While a sale or merger in itself is not unusual, UNFI would seem to be one of the least likely to step in to acquire Supervalu.
So what does this transaction actually mean to any supermarket retailers business? With UNFI one of the stated goals are to reduce or eliminate Supervalu ownership of retail locations. This would give this newly coordinated entity of UNFI & Supervalu, through an expanded supply chain, the opportunity to sell retail banners and locations. Those retail stores, banners and all could be exchanged for long term buying agreements with some of the major supermarkets throughout the United States.
"Will The Consumer Enjoy Healthier Choices More Readily Available"
This newly formed company either operating separately or together could now combine traditional grocery offerings with healthy lines normally unavailable to the traditional grocer through the present supply chain process.
Looking further into some of the possibilities, UNFI is a preferred vendor of Whole Foods now part of the Amazon empire. So can we connect the dots from Supervalu, UNFI, Whole Foods back to Amazon? Are we about to experience an alliance and the building of a supply chain in retail food like never before?
"How Does Amazon Fit In...Does Amazon Fit In"
Does Amazon connect the dots and become the nations largest digital and conventional grocery wholesaler? is there another deal inside this already complex deal?
Would that combined effort, possibly including Amazon put an end to procurement and some of its customary income like slotting as we presently understand it?
Which of these companies now tied together in one manner or another could resist this opportunity to combine supply chain efforts and the resulting synergies?
While all of this is interesting to ponder, one has to believe we can only understand the initial moves of a larger picture still well out of focus.
There are so many moving parts here that could come into play to create so many retail and wholesale income opportunities.
Amazon appears to have an interest in an industry where the multiple of earnings could bring Amazon some new found humility. The grocery industry is accustomed to a much lower multiple of earning that could make Amazon shareholders somewhat uncomfortable.
It seems for some time there will continue to be more questions than answers.
Many have asked why I choose to write about what I see in the supermarket industry today and my ideas. At Bad-Adz Digital, PreparedFoodPhotos.com & Adlife we believe great ideas and the resulting branding will give new life and direction to any company. So for that reason we chose to open the discussion.
Yes, I understand I probably misspelled something or butchered the English language in a few places, the goal however was to open your minds to new ideas.
Joel Albrizio, President Bad-Adz.com, PreparedFoodPhotos.com & Adlife.com
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