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Smart and Final Agrees to USD 1.12bn Apollo Funds Buyout
Thursday 18 April 2019

18 April 2019 - US-based discount food and everyday staples retailer Smart and Final Stores, Inc. (NYSE: SFS) has entered into a definitive merger agreement with certain investment funds managed by affiliates of alternative investment manager Apollo Global Management, LLC (NYSE: APO), under which the Apollo Funds will acquire all the outstanding shares of Smart and Final's common stock for USD 6.50 per share in cash, the company said.

The purchase price represents a premium of approximately 25% over Smart and Final's average closing share price over the past 24 trading days since the company's earnings announcement on March 13, 2019.

Smart and Final was previously owned by funds managed by affiliates of Apollo from 2007 to 2012 before its sale to Ares Management, L.P. in November 2012.

The transaction will be completed through an all-cash tender offer. The Smart and Final board of directors unanimously recommends that Smart and Final stockholders tender their shares in the offer.

This transaction, which is expected to close by 3Q19, is conditioned upon satisfaction of the minimum tender condition which requires that shares representing more than 50% of the company's common shares be tendered, the receipt of approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Mexican competition law approval, and other customary closing conditions.

Smart and Final's major stockholders, affiliates of Ares Management, representing a majority of the outstanding shares have entered into a Tender and Support Agreement committing them to tender their shares into the tender offer.

The transaction has fully committed financing in place, the company said.

Upon completion of the transaction, Smart and Final will be a privately held portfolio company of the Apollo Funds, and Smart and Final's ordinary shares will no longer be listed on the New York Stock Exchange.

Smart and Final is a value-oriented food retailer headquartered near Los Angeles in Commerce, California. It operates 257 stores under its Smart and Final banner.

Its larger format stores, Smart and Final Extra! stores, combine the warehouse store with traditional grocery offerings like farm-fresh produce and natural and organic options, to provide a one-stop shop for all.

Smart and Final also operates 67 stores located in the Pacific Northwest and Northern California under its Smart Foodservice banner, which sell foodservice offerings in a "no-frills" warehouse format primarily to business customers such as restaurants, caterers, and a wide range of other foodservice businesses.

Founded in 1871, Smart and Final remains committed to giving back to its communities through employee volunteer opportunities and donations to local nonprofits.

Apollo is a global alternative investment manager with offices in New York, Los Angeles, San Diego, Houston, Bethesda, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong, Shanghai and Tokyo.

Jefferies LLC, Citigroup Global Markets Inc., and Centerview Partners LLC are serving as financial advisors to Smart and Final, and Kirkland and Ellis LLP is serving as its legal advisor.

Gibson, Dunn and Crutcher LLP is serving as legal advisor to the Strategic Review Committee of the Smart and Final board of directors. Morgan, Lewis and Bockius LLP is acting as legal advisor to the Apollo Funds, and Paul, Weiss, Rifkind, Wharton and Garrison LLP is acting as legal advisor to the Apollo Funds as it relates to the debt financing.
Date Published: 18/04/2019
Target: Smart and Final Stores, Inc
Country: USA
Deal Size: 1.12bn (USD)
Sector: Wholesale/Retail
Type: LBO
Financing: Cash
Status: Agreed
Buyer: Apollo Funds
Buyer Advisor: Morgan, Lewis and Bockius , Paul, Weiss, Rifkind, Wharton and Garrison