Rumors have been circulating that Smart & Final Stores Inc. is up for sale, rumors that has been affirmed in an exclusive report by Reuters. The report suggests that the company’s majority stakeholder, private equity firm Ares Management Corp, is exploring its options, and may seek to cash out.
In 2012, Ares acquired controlling interest in the retail and foodservice chain, at which time, Ares purchased a $975 million stake in Smart & Final from Apollo Global Management—including assumed debt.
After that deal, in 2014, Ares took Smart & Final public. Initially priced at $12, the shares have since lost value, as the retailer struggles in a competitive marketplace.
Ares declined to comment on the reports, but sources told Reuters that there is no certainty of a sale. Smart & Final released a statement to the news source, commenting that “the company is focused on executing its strategic plan and that its longstanding policy is not to comment on market rumors or speculation.”
Smart & Final held, net of debt issuance costs, $653.0 million in debt, as of October 7. At that time, the retailer operated 324 grocery and foodservice locations under the “Smart & Final,” “Smart Foodservice Warehouse Stores,” and “Smart & Final Extra!” locations in California, Oregon, Arizona, Washington, Idaho, Nevada, Montana, and Utah. It additionally operated 15 stores in Northwestern Mexico through a joint venture.
"Our third quarter performance was solid with 2.8% year-over-year growth in overall sales,” said Smart & Final’s President and CEO David Hirz in the company’s third quarter 2018 financial statement. “We also delivered our sixth consecutive quarter of positive comparable store sales, with growth in both average transaction size and merchandise margins despite greater pressure from deflation in product prices.”
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