Monday, April 18, 2011
Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today
Last Thursday (April 14) Fresh & Easy Buzz's 'The Insider' columnist broke the news that Phoenix, Arizona-based Sprouts Farmers Market's acquisition of Irvine, California-based Henry's Farmers Market would be final today, Monday, April 18. [Read the column here: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18.]
Today, Sprouts Farmers Market announced the finalization of the deal that merges the 43-store Henry's Farmers Market chain into Sprouts, creating a 99-store chain - Sprouts Farmers Market - with about $1 billion in annual sales.
There are currently 34 Henry's Farmers Market stores in California and nine Sun Harvest banner units in Texas. Sprouts currently operates 56 stores. The stores are in California, Nevada, Arizona, Colorado, New Mexico, Utah and Texas.
'The Insider' also broke the news in his January 5, 2011 column that the owner of Henry's Farmers Market, private equity firm Apollo Global Management, and representatives of Sprouts Farmers Market were in serious negotiations about an acquisition-merger of the Henry's chain by Sprouts.
On February 16, 2011 Sprouts Farmers Market and Apollo Global Management announced that a deal had been done, and that it would be finalized in the second quarter of this year.
Under the deal worked out between Apollo Global Management and Sprouts Farmers Market, which is final today, Henry's Farmers Market will be merged into and become part of Sprouts; a single chain. The combined operations Will be run by Sprouts Farmers Markets out of its corporate headquarters in Phoenix. The Henry's and Sun Harvest banner stores will eventually be changed to the Sprouts Farmers Market name. [Read the February 16 announcement here.]
Additionally, under the deal, Apollo Global Management will become the majority owner of Sprouts Farmers Market. The current owners of Sprouts, which include two of the four founders of the chain, chairman of the board Stan Boney and his son, CEO Shon Boney, will hold a minority ownership interest in the farmers market-style food and grocery retailer.
Sprouts Farmers Market announced the finalization of the Henry's deal, which Fresh & Easy Buzz reported five days ago would happen today, in a variety of ways today, including posting a statement [here] on its Sprouts-Henry's 1farmersmarket.com website, as well as on its Facebook page and various Twitter feeds.
Sprouts also announced today's finalization of the deal via a letter from the chain's president, Doug Sanders. In the letter, which is similar to the statement on the 1farmersmarket.com website linked above, Sanders said about merging Henry's into Sprouts Farmers Market: "As similar as our companies always have been, it will take time, patience and great diligence to merge them into one." We will be "carefully analyzing best practices and products [of both Sprouts and Henry's] to become more than just the sum of our parts," he added.
Sanders also said about the combined chains' that new products will start appearing on store shelves - most specifically will be the introduction of the Sprouts Farmers Market private brand onto the shelves of the Henry's and Sun Harvest stores in California and Texas - over the next few weeks. He also said new programs will be introduced in late spring-to-early summer. Shoppers will also see employees sporting new uniforms in the stores starting in September, according to Sanders.
It will be a number of months before the Henry's and Sun Harvest banner stores are changed to the Sprouts Farmers Market name. Sprouts plans first to change the name of the Sun Harvest markets in Texas, followed by doing the same with the Henry's stores in California.
Sprouts plans to open at least seven additional new stores this year, including at least six units in California, in the following cities: Redondo Beach, Westlake Village, Dublin, Costa Mesa, Lakewood and Granada Hills, along with a store in Carrollton, Texas. A planned new Sprouts market in Citrus Heights, California, which is near Sacramento, could also be opened at the end of this year. But more-likely the store will be opened in early 2012, according to our sources.
Henry's had a number of new stores planned prior to the merger talks and deal, mostly in Southern and Northern California. Sprouts has been evaluating those planned locations, and according to our sources, will open those Henry's stores in the pipeline that don't duplicate new locations Sprouts Farmers Market currently has in the pipeline.
For example, pre-deal, Henry's, like Sprouts, was putting a major focus on obtaining locations in Northern, California, where there are currently two Sprouts banner stores, in Sunnyvale and Roseville, and one Henry's unit, in Elk Grove. Roseville and Elk Grove are near Sacramento. Sunnyvale is near San Jose, in the Bay Area.
A Henry's store is planned for Walnut Creek, which is in the east Bay Area. Sprouts plans to go forward and open the Walnut Creek store in 2012.
One the other hand, Henry's was looking at locations in Roseville, where Sprouts opened its store April 6. Our sources say a second (the pre-merger potential Henry's) unit in Roseville is unlikely so soon to opening the first store in the city.
'The Insider,' who since January 5 has been on this story like a private equity firm executive in search of a big-bonus IPO, will have more on the "new Sprouts Farmers Market" later this week. Stay tuned.
[Readers: You can follow the Sprouts-Henry's acquisition-merger story in Fresh & Easy Buzz from January 5, 2011, when we first broke the news that serious talks were taking place between the two parties, to last Thursday (there's much in-between those dates), when our 'The Insider' columnist correctly reported the acquisition-merger would become final today at the following links - The Insider, Sprouts Farmers Market, Apollo Management, Henry's Farmers Market, Smart and Final, Sprouts-Henry's Deal, Sprouts.]