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The Fresh Market Acquired By Apollo Global Management: The Right Move With The Right Company

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The Fresh Market, photo by Neil Stern

The Fresh Market (TFM) announced that it would be acquired today by Apollo Global Management for $1.36 billion, or $28.50/share. This represents nearly a 50% premium from Thursday’s close, where speculation on an eventual acquirer began to ramp up. It also puts to an end several months of speculation on the company’s future after a strategic review of alternatives commenced. During this time, there had been rumors of prior family ownership retaking control of the company as well as Kroger, which has been on an acquisition spree of its own, taking a look.

Apollo is an excellent acquirer in this situation, having had terrific success in their two most recent investments in the space, Sprouts Farmers Market and Smart & Final. Sprouts, in particular, should offer a number of clues on how to re-position Fresh Market, who has 176 stores throughout the country but has seen its recent sales and new store opening growth stall of late. New leadership at Fresh Market has identified several major initiatives, including redefining the value equation, improving margin and re-defining how they differentiate themselves in the market. While these are undoubtedly the right areas to be focused on, large scale chain of this nature is often much better suited under private ownership, where month to month results aren’t under as much scrutiny.

While Fresh Market has had an extraordinary run of success, positioning the company for the next decade while facing increased competition will be a great challenge.

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