Apollo to Acquire Fresh Market in $1.4 Billion Cash Deal

fresh marketApollo Global Management LLC has agreed to buy The Fresh Market Inc. (TFM) in a $1.4 billion cash deal. Fresh Market would be the third $1 billion+ acquisition for the firm since February.

As part of the deal, shareholders would receive $28.50 a share, according to a statement from the companies on Monday. The firm’s offer is a 24% premium on Fresh Market’s Friday closing price.

The deal would signal a return to the grocery business for Apollo, which formerly owned Smart & Final Stores Inc. and Sprouts Farmers Market Inc. Fresh Market may get the boost it needs to reignite sales growth, which has been sluggish since its IPO in 2010 as competition mounts from Wal-Mart Stores Inc. (WMT) and Kroger Co. (KR).

Rumors swirled in October that Fresh Market approached Apollo for help in exploring a buyout. Kroger was also named as a potential buyer.

Before agreeing to the sale, Fresh Market’s board held a thorough and open review of strategic alternatives, the company said in a statement. Fresh Market can still solicit a better offer for 21 days after signing a deal.

Ray Berry, founder of the company, and his son Brett will remain with the company. Neither will tender their shares, and the vast majority of their stakes will be rolled over in the Apollo transaction. Together, the two own about 9.8% of company stock.

Shares for Fresh Market were up as much as 24% on the news, climbing to $28.47. The higher share price is still below the offer from Apollo, which indicates that investors aren’t expecting a higher bid for the company.

The Fresh Market deal is the third largest for Apollo this year. The firm agreed in February to purchase Apollo Education Group Inc. (APOL) in a $1.1 billion deal, and announced later that month that it would be purchasing ADT Corp. (ADT) for $6.9 billion.

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