Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18

 

The Insider - Heard on the Street

As regular readers of Fresh & Easy Buzz know, I broke the news in my January 5, 2011 column that private equity firm Apollo Global Management, owner of grocery chains Smart & Final and Henry's Farmers Market, both based in Southern California, and Phoenix, Arizona-based Sprouts Farmers Market were in serious deal talks about an acquisition (or merger) of the Henry's chain by Sprouts.

I also reported on the positive progression of the deal talks in a series of columns beginning after January 5, leading up to to the February 16, 2011 announcement by Apollo and Sprouts Farmers Market that a deal had been done, in which Sprouts would acquire Henry's Farmers Market, and that as part of the deal the investment firm would become majority owner of the Sprouts chain, in partnership with its current group of co-founders and co-owners, which include CEO and board member Shon Boney and his father Stan, who's chairman of the board.

Shon Boney's father and his uncle, Scott Boney, founded the chain that eventually became Henry's Farmers Market, naming it after their farther, Henry Boney, who started the first family market, a fruit stand in San Diego, in 1943.

Scott Wing and Kevin Easler co-founded Sprouts Farmers Market with Stan and Shon Boney. Like the Boney's, the two men hold minority ownership stakes in the company and serve on the board, as do Sprouts' president, Doug Sanders, and chief financial officer Brad Denton. One or more representatives of private equity firm Apollo Global Management will join the current six-person Sprouts Farmers Market board after the Henry's Farmers Market acquisition-merger is final on Monday.

This morning I can report the acquisition-merger of Henry's Farmers Market by Sprouts Farmers Market and Apollo Global Management will become final on Monday, April 18, unless there's a major hiccup between today and Monday, which is unlikely. If such a hiccup were to occur, which is doubtful, the finalization of the Henry's-Sprouts merger will still happen before the end of next week, my sources tell me.

The finalization of the deal, announced on February 16, will allow Sprouts Farmers Market to begin consolidating and integrating the Henry's operation, which is headquartered in Irvine, California, and the 40-plus Henry's banner (in California) and Sun Harvest banner (Texas) stores into its operations.

Sprouts plans to first change the Sun Harvest banner stores in Texas to the Sprouts Farmers Market name. Later is plans to re-brand the Henry's Farmers Market banner stores to Sprouts Farmers Market. All new Henry's and Sun Harvest banner stores in the pipeline will be opened under the Sprouts banner.

Even though Apollo Global Management will continue to be the majority-owner of City of Commerce California-based Smart & Final, as well as becoming the majority-owner of Sprouts Farmers Market, the two grocery chains will not have anything to do with one another from an operations standpoint. The two chains are separate corporate entities but do share the same parent - private equity firm Apollo Global Management.

Speaking of that shared parent, here's a prediction: Look for Apollo Global Management to take Sprouts Farmers Market public in an IPO about 12 -to- 24 months from Monday, April 18.

According to my sources, Sprouts Farmers Market will keep the Henry's Farmers Market headquarters office in Irvine, California operating no longer than six -to- 12 weeks after the deal closes on Monday, as it transitions the Henry's corporate functions to its Arizona corporate office.

The majority of the Henry's Farmers Market headquarters employees will lose their jobs because the buying, merchandising, marketing, finance, human resources and other corporate functions will be picked-up by existing Sprouts Farmers Market headquarters' employees in Phoenix, as is almost always the case in such acquisitions and mergers. It's a way to immediately reduce staff-level labor costs.

Sprouts recently signed a 32,306 square foot lease renewal and expansion of its corporate offices at the Paradise Village Office Park, which is at 11811 North Tatum Boulevard in Phoenix, in preparation of the closing of the deal on Monday, according to the joint-venture owners of the property, Sterling American Property Inc. and Phoenix-based Lincoln Property Company, who's brokers published the lease signing on April 7. Lincoln Property Company manages the 268,598 Paradise Village Office Park complex in Phoenix.

Most of the Henry's headquarters employees already know their fate and when they're leaving the company. Those few who don't know will learn more next week.

So far only a couple of the headquarters' employees have been offered jobs by Sprouts Farmers Market at its Arizona offices. My sources tell me just two of the members of the Henry's Farmers Market corporate team, president Jim Nielsen and a merchandising-schematics staffer, have been offered and excepted positions at Sprouts in Arizona. Nielsen will become Sprouts chief operating officer once the acquisition-merger is final on Monday. He announced his position in a letter posted on the Henry's Farmers Market website in March, 2011.

A handful of other Irvine headquarters office employees have been offered field merchandising and store-level positions at some of the existing Henry' stores in Southern California that will eventually fly the Sprouts Farmers Market banner.

Integrating Henry's Farmers Market's corporate functions and operations into Sprouts' Phoenix, Arizona headquarters should be fairly seamless because as noted above Jim Nielsen is joining Sprouts Farmers Market as its chief operating officer. Nielsen previously held the chief operating officer title at Henry's Farmers Market, before being promoted not too long ago to president.

None of the Henry's and Sun Harvest store employees are being let go at this point in time specifically due to he merger. It's likely that will only happen if and when Sprouts closes any of the existing 40-plus Henry's and Sun Harvest stores. And if it does close any of the stores, and if so it won't be many units, Sprouts will likely offer employees jobs at existing or new stores that come on line, my sources say.

When the deal closes on Monday, the combined Sprouts and Henry's - then called Sprouts Farmers Market - will operate 99 farmers market-style food and grocery stores in California, Nevada, Arizona, New Mexico, Colorado and Texas.

Sprouts opened it's newest store in Roseville, California, which is near Sacramento in Northern California, on April 6. Sprouts Farmers Market will open at least seven additional new stores this year, including units in Redondo Beach, Westlake Village, Dublin, Costa Mesa, Lakewood and Granada Hills (all  in California), and Carrollton, in Texas, according to Sprouts Farmers Market's CEO, Shon Boney. Another new store in Citrus Heights, California, near Sacramento, could also be opened at the end of this year, or in early 2012.

I'll  have more on the new Sprouts Farmers Market - which will have annual sales of about $1 billion and over 100 stores, in the 20,000 -to- 32,000 square-foot range, making it a major player in the Western U.S. - in a follow-up column soon.

- The Insider

[Editor's Note: Read 'The Insider's' columns on the Henry's-Sprouts Farmers Market deal, along with our additional coverage, at the links below.]

~February 16, 2011: The Sprouts-Henry's Deal: New Website Reunites the Two Grocery Chains As 'One Farmers Market'

~February 16, 2011: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market

~January 5, 2011: 'The Insider' - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

~January 7, 2011: 'The Insider' - Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

~January 8, 2011: Smart & Final-Henry's Tell Employees About Deal Discussions With Sprouts Farmers Market; Confirming 'The Insider's' Reports

~January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

~January 11, 2011: 'The Insider' - A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

~January 24, 2011: 'The Insider' - End-Game Could Be Near in the Sprouts Farmers Market-Henry's Farmers Market Deal Talks

~January 30, 2011: 'The Insider' - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal

Also see:

~December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver

~November 17, 2010: Smart & Final Pulls the Plug On All Five SmartCo Foods Stores in Metro Denver After Being Open Less Than Five Months

Plus, read more about Sprouts Farmers Market, Henry's Farmers Market, Smart and Final and Apollo Management by clicking on the green links. Use the "older post" and "newer post links at the bottom of each linked page for additional pages/stories.

Sprouts Farmers Market and Sunflower Farmers Market Ink Acquisition-Merger Deal

The Insider - Heard on the Street

In my November 6, 2011 column - Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition - I reported that representatives of Arizona-based Sprouts Farmers Market and Colorado-headquartered Sunflower Farmers Market were engaged in negotiations regarding either an outright acquisition of Sunflower by Sprouts' or a merger-type acquisition of Sunflower Farmers Market into Sprouts Farmers Market, with Sprouts' and its majority-owner private equity firm Apollo Global Management absorbing Sunflower into Sprouts' corporate structure and operations, like it did with the Henry's Farmers Market deal last year.

Today I can report that, according to my sources, Sprouts Farmers Market and Sunflower Farmers Market have reached an agreement in principle for such an acquisition-merger, which they currently plan to announce no later than two weeks from today, assuming some additional details and specifics can be worked out between the two farmers market-style grocery chains.

My sources tell me representatives of both grocery chains have signed a memo of understanding or letter of intent to merge the two food retailing companies, with Sprouts Farmers Market in the lead role, and that those additional details and specifics are currently being negotiated on by the two chains.

Neither Sprouts Farmers Market or Sunflower Farmers Market has publicly announced they've been engaged in deal talks, nor have they confirmed or denied my November 2011 report. Additionally, based on my research using the major Internet search engines, no other publications besides Fresh & Easy Buzz have reported on the deal talks to date.

Sprouts Farmers Market currently operates 103 farmers market-style grocery stores in California, Arizona, Colorado and Texas.

The retailer closed three stores - Rollingwood, Sunset Valley and Anderson Lane -  in Austin, Texas, in December 2011. The store closings were the result of having too many units too close to each other in Austin, following the Henry's Farmers Market merger last year. Henry's had some Sun Harvest banner stores in Austin which were nearby existing Sprouts locations, resulting in the duplication issue. No other Henry's or Sun Harvest banner stores have been closed to date.

Sunflower Farmers Market operates 35 farmers market-style stores in eight states in the Western U.S. - Colorado (12), Arizona (7), New Mexico (6), Nevada (2), Texas (2), Oklahoma (1), Utah (3) and California (2).

The Sunflower format, as was the Henry's Farmers Market format, is virtually identical to Sprouts Farmers Market's format.

Based on information given Fresh & Easy Buzz by the chain late last year, along with my analysis of added sales from new stores open since then, I estimate that Sprouts Farmers Market currently has annualized sales in the $1.2 billion-to-$1.4 billion range.

Additionally, based on conversations with sources at Sunflower Farmers Market, I estimate the chain's current annual sales to be in the $600 million-to-$700 million range.

Neither grocery chain is publicly-held. Therefore Sprouts and Sunflower don't released annual sales publicly as a matter of record. However, senior executives of both chain's publicly mentioned annual sales numbers in interviews last year. I expect a mention of those metrics to be made again as part of any deal announcement.

Both Sprouts Farmers Market and Sunflower are expanding rapidly, focusing in large part on the same Western U.S. States.

For example, both farmers market-style grocery chains are putting a major new store opening emphasis in Northern California for 2012, where each plans to open numerous new stores this year.

Sprouts and Sunflower both also plan to open new stores (one each respectively) in Phoenix, Arizona this year, along with in Colorado.

Sunflower Farmers Market though, unlike Sprouts, has a wider geographical reach with its growth strategy, currently operating in eight states, compared to Sprouts Farmers Market's presence in four states, which are California, Arizona, Colorado and Texas.

For example, in 2011 Sunflower Farmers Market expanded into Northern California and Oklahoma, where it plans to open at least one new store this year, which will be its second unit in the state.

Sunflower currently has two units in California, in Roseville near Sacramento and in Modesto, which is in the Northern Central Valley. It currently has plans to open four new stores in Northern California this year.

Sunflower Farmers Market has no current plans to open stores in Southern California, which is where Sprouts has the highest number of stores out of its total store base.

Sprouts Farmers market currently plans to open at least three stores in Northern California this year.

A deal with Sunflower Farmers Market (a combined Sprouts Farmers Market and Sunflower) will give Sprouts' an immediate presence in four additional states - Nevada, Utah, New Mexico and Oklahoma. All four of these states fit well geographically with where Sprouts Farmers already is geographically.

Additionally, Sunflower's growth focus in Northern California, which mirrors that of Sprouts Farmers Market - and the fact it has no stores in Southern California (no duplication) - is also synergistic in terms of a combined Sprouts' and Sunflower, as is the fact the two grocery chains operate stores of the same farmers market-style  of which are virtually identical to the Henry's Farmers Market chain. Sprouts' has now changed all the Henry's and Sun Harvest stores to the Sprouts Farmers Market banner.

To put is directly, a year ago there were three farmers market-style grocery chains in the U.S. - Henry's, Sprouts and Sunflower - all operating in the same Western U.S. states. Today there are just two - Sprouts (with the combined Henry's) and Sunflower Farmers Market. If all goes according to plan, there soon will be just one such chain, Sprouts Farmers Market (the combined Sprouts, Henry's and Sunflower), otherwise know as the house the Boney family built.

A little over one year ago I broke the news in this January 5, 2011 column - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards - that Sprouts Farmers Market and the owner of then Irvine, California-based Henry's Farmers Markets were engaged in talks involving an acquisition/merger deal between the two farmers market-style grocery chains.

In a series of follow-up columns - and in various news stories published in January and February 2011 in Fresh & Easy Buzz, we further reported and developed the story, adding new information about the deal talks between private equity firm Apollo Global Management, which owned Henry's through its Southern California-based Smart & Final LLC retail company and is now the majority-owner of Sprouts Farmers Market.

On February 15, 2011 Apollo Global Management announced through Smart & Final that it would merge its Henry's Farmers Market chain with Sprouts, in a deal that would give Apollo majority ownership of Arizona-based Sprouts Farmers Market (the combined Sprouts and Henry's chains), with Henry's being absorbed into Sprouts' existing corporate structure and operations.

On April 15, 21 I reported that the Sprouts-Henry's deal would be final on April 18. [See: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18.]

On April 18, 2011, Sprouts Farmers Market announced the deal was final in a press release. [See: Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today.]

The Devil is always in the details, as I carefully noted at the top of this column. But, according to my sources, where things stand today, what I've called the (farmers market-style food and grocery retailing format) "Roll Up Times Two" (Henry's being the first one) is on the way, unless the Devil messes with those details.

- The Insider

[Readers: Our extensive reporting, analysis and commentary of and on the Henry's Farmers Market-Sprouts Farmers Market deal in 2011, the Sprouts'-Sunflower deal talks, and much more can be found at these links: The Insider, Sprouts Farmers Market, Sprouts-Henry's Deal, Sunflower Farmers Market, Apollo Management, Henry's Farmers Market.]

Sprouts Farmers Market Plans to Close Henry's Farmers Market's Corporate Office in Irvine, California July 9

The Insider - Heard on the Street

It's nearly all over in Irvine accept for the sweeping, mopping and locking up.

Sprouts Farmers Market plans to close the Henry's Farmers Market corporate office in Irvine, California July 9, as it completes its consolidation of Henry's headquarters operations into its corporate offices in Phoenix, Arizona, according to my sources.

And since July 9 happens to be a Saturday, there will be time to do some sweeping and mopping up before turning the key in the lock of the Irvine office doors for the very last time.

Sprouts Farmers Market hasn't announced when it plans to close the Henry's Farmers Market's corporate office - just that it will do so at some point. Additionally, a closing date hasn't been reported by any other publication to date, at least based on a search of the three major Internet search engines I did before writing my column.

All the Henry's headquarters employees remaining employed by Sprouts Farmers Market have either moved into their respective jobs at Henry's stores in Southern California or out in the field, or to the grocer's corporate headquarters offices (just a handful of workers) in Phoenix, as the consolidation process that began immediately after Sprouts' and its new majority-owner, private equity firm Apollo Global Management, got the green light from U.S. government regulators on April 18, 2011 that the deal to merge Henry's into Sprouts Farmers Market was approved and final, is nearly completed.

The Henry's corporate headquarters employees not remaining with Sprouts Farmers Market, which include most of the category managers/buyers and other support staff like finance, marketing, administration and human resources, have been laid off, the last remaining batch having completed their tenure in Irvine last week, according to my sources.

The Henry's Farmers Market Stores in Southern California will continue to fly the Henry's banner for most of this year. However, by mid-2012 or earlier all of those units should be re-branded to the Sprouts Farmers Market banner, my sources tell me.

Sprouts has already changed the name of the single Henry's store in Northern California to Sprouts Farmers Market. That store is in Elk Grove, near Sacramento. Sprouts has a store in nearby Roseville. The combining of the two farmers market-style grocery chains, which share a family history, gives Sprouts Farmers Market a little better brand recognition in the Sacramento area, where it will open a third store in Citrus Heights in early 2012 and is looking for numerous other locations.

Phoenix-based Sprouts is starting the re-branding process with Henry's nine Sun Harvest banner stores in Texas. Sean Boney, CEO of Sprouts Farmers Market said in April the Sun Harvest stores should all be flying the Sprouts banner before the end of this year.

The closing of the Henry's Farmers Market headquarters in Irvine will be the end of long era of the chain's being based in Southern California, where it was founded by members of the Boney family, who also are he founders of Sprouts Farmers Market, despite being bought and sold twice over the last couple decades.

For example, Henry's remained headquartered in Southern California through two corporate ownership changes - Wild Oats Markets Inc., which bought the chain from the Boney family - and Commerce, California-based Smart & Final, Inc.

Smart & Final, which is also owned by Apollo Global Management, bought Henry's Farmers Market from Whole Foods Market, Inc. in 2007. Whole Foods Market obtained Henry's in its 2007 acquisition of Wild Oats Markets. The hybrid conventional-natural foods farmers market style chain didn't fit Whole Foods' plans so it sold it to Smart & Final.

Apollo Global Management bought Henry's Farmers Market from Whole Foods Market in 2007 because it wanted a growth vehicle to combine with its Smart & Final chain.

Smart & Final, which operates mostly small-format non-membership warehouse stores, along with some Smart & Final Extra smaller-format style grocery stores, has historically relied on food-service customers - mom and pop grocers, restaurants and the like - for a significant percentage of sales.

However, Apollo's strategy since owning the chain has been to become more of a consumer-focused food and grocery retailer, which led to the start-up of the Extra format stores, the acquisition of Henry's in 2007, and last year's ill-fated launch of five SmartCo Foods stores in metropolitan Denver, Colorado which were closed a few months later. [See - December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver and here for details and analysis.]

(Smart & Final's future post Henry's becoming part of Sprouts Farmers Market is the topic of a follow-up column coming soon. Stay tuned.)

Meanwhile Sprouts Farmers Market opened its newest store today. The store is in Dublin, California, which is in the Easy Bay Area, no more than a stone's throw from Safeway Stores' corporate headquarters in Pleasanton.

The Dublin market is Sprouts' third store in Northern California. It also has stores in Sunnyvale (South Bay Area), Roseville and Elk Grove (the former Henry's unit).

It's also one of seven new stores Sprouts Farmers Market plans to open between April and December of this year. In addition to the Dublin store, five of the seven stores are in Southern California, in the following cities: Redondo Beach, Westlake Village, Costa Mesa, Lakewood and Granada Hills. The remaining store is in Carrollton, Texas.

Back in Northern California, which is Sprouts' newest market region and a major focus for the retailer because it plans to open numerous stores in the region over the next few years, the farmers market-style grocery chain is set to begin renovation and expansion in July of a former Co-op grocery store in Walnut Creek(East Bay Area), which it plans to open in early 2012, along with the store in Citrus Height mentioned earlier.

The Walnut Creek store was planned by Henry's prior to the deal. It fit Sprouts' Northern California plan well, so it decided earlier this year to move forward on the location.

- The Insider

Fresh & Easy Buzz's 'The Insider' on the Apollo/Sprouts/Henry's Deal + Related Stories

April 18, 2011: Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today

April 14, 2011: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18

~February 16, 2011: The Sprouts-Henry's Deal: New Website Reunites the Two Grocery Chains As 'One Farmers Market'

~February 16, 2011: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market

~January 5, 2011: 'The Insider' - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

~January 7, 2011: 'The Insider' - Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

~January 8, 2011: Smart & Final-Henry's Tell Employees About Deal Discussions With Sprouts Farmers Market; Confirming 'The Insider's' Reports

~January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

~January 11, 2011: 'The Insider' - A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

~January 24, 2011: 'The Insider' - End-Game Could Be Near in the Sprouts Farmers Market-Henry's Farmers Market Deal Talks

~January 30, 2011: 'The Insider' - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal

Also see:

~December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver

~November 17, 2010: Smart & Final Pulls the Plug On All Five SmartCo Foods Stores in Metro Denver After Being Open Less Than Five Months

Plus, read more about Sprouts Farmers Market, Henry's Farmers Market, Smart and Final and Apollo Management by clicking on the green links. Use the "older post" and "newer post links at the bottom of each linked page for additional pages/stories.

Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

The Insider - Heard on the Street

In my column on Wednesday (January 5, 2011) I wrote about talks and negotiations going on between representatives of Arizona-based Sprouts Farmers Market and Apollo Management/Smart & Final, regarding a possible acquisition of the Smart & Final-owned Henry's Farmers Market chain by privately-held Sprouts. Private equity firm Apollo Global Management owns Smart & Final, which is based in City of Commerce, California.

You can read the full column at this link - January 5, 2011: Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards.

Below are a few things I've learned since Wednesday, along with some other new information and analysis about a combined Sprouts and Henry's.

First, since the column appeared on Wednesday, serious talks and negotiations have continued between representatives of Sprouts Farmers Market and Apollo/Smart & Final, regarding a potential purchase of the Henry's Farmers Market chain by Sprouts. However, as of today, no deal has been done.

Based on current information, I don't expect the talks to result in a deal announcement in the next few days, if there is one, although unless one is directly participating in negotiations of this kind it's impossible to know the rate in which progress is actually being made. Instead, based on what I've learned, if a deal is done, expect it to be announced around the January 14-21 time period, at the earliest. And of course, it's possible a deal agreeable to both parties won't be reached. It's the nature of the acquisition negotiation dance, after all.

However, based on the information I have at this point in time, things are pointing more in the direction of a deal happening between the two parties rather than one not happening.

I've also learned that since publication of the column on Wednesday, Apollo/Smart & Final has told a select number of senior-level employees (beyond those doing the negotiating) that talks are going on about the possible sale of Henry's Farmers Market to Sprouts Farmers Market.

If the deal does happen, acquiring Henry's Farmers Market will roughly double Sprouts' store count and its annual sales. It will also bring back home some family food retailing history for Stan and Shon Boney, two of the four founders of Sprouts Farmers Market. Shon Boney is the CEO of Sprouts. His father Stan Boney is chairman of the board.

Stan Boney is Henry Boney's son and Shon Boney is the grandson of the "Henry" who started the Henry's Farmers Market format and chain. It was first called Boney's Marketplace in the early 1980's. In 1997 the family renamed it Henry's Marketplace, after Henry Boney's first name, changing it from the family's last name. Not long after Wild Oats Markets Inc., which Whole Foods Market, Inc. acquired in 2007, bought Henry's in 1999, it renamed the chain Henry's Farmers Market.

In late 2007-early-2008, Stan and Shon Boney and team at Sprouts Farmers Market set a strategic goal of having 100 stores open and operated in the Western and Southwestern U.S. in five years - late 2012-to-early 2013.

Sprouts Farmers Market is halfway there today. But a 2011 acquisition of or merger of some kind with Henry's Farmers Market would, along with the new stores Sprouts has set to open this year, put it well over the 100-store mark far in advance of that late 2012-early-2013 marker.

Sprouts Farmers Market, which is headquartered in Phoenix, Arizona, currently has its 54 stores in Arizona, Colorado, California and Texas. The Henry's Farmers Market chain has its stores in California and Texas. The California stores are under the Henry's Farmers Market banner, while the Texas stores are called Sun Harvest Farmers Market.

On of Sprouts' key strategic goals is to have more stores in California. Its been opening numerous new stores in Southern California since 2009, for example, and opened its first store in Northern California last year. Shon Boney has also said publicly he would like to have more stores in the San Diego region in far-Southern, California, where Sprouts Farmers Market has only a handful of units.

All but 11 (the Sun Harvest units in Texas) of Henry's 46 stores are in California. And all but one of the California stores, the grocer's first unit in Northern California, which like Sprouts Farmers Market, Henry's Farmers Market opened in 2010, are in Southern California, including a number of units in the San Diego area, a key strategic factor for Sprouts.

The California connection described above, along with the fact Henry's Farmers Market has the 11 Sun Harvest stores in Texas, where Sprouts Farmers Market has major growth plans, are the primary reasons CEO Shon Boney and Sprouts' board of directors, which in addition to chairman Stan Boney and son Shon includes the other two co-founders of the chain, Scott Wing and Kevin Easler, is in a nutshell why the retailer sees a good strategic fit in buying Henry's Farmers Market.

Lastly, it's important to note Sprouts Farmers Market and Henry's Farmers Market are essentially equals in terms of respective store-counts and annual sales. This logically should lead some readers to ask how privately-held Sprouts Farmers Market could come up with the money or financing to acquire it's near-equal-in-size Henry's.

The answer to this is to keep in mind that the owner of Smart & Final, and thus its Henry's Farmers Market chain, is a private equity firm, Apollo Global Management. As such, there exist a myriad of ways a private equity firm such as Apollo can structure deals with potential buyers like Sprouts Farmers Market, including owning an interest in Sprouts as part of the deal, helping to arrange financing, helping to bring in other investors, and so on. Private equity firms like Apollo buy, work to add value to, and then sell companies and entities like Henry's Farmers Market. And there are many ways to sell or spin off such companies and entities, including finding a match with a solid potential mate - another farmers market-format kissing cousin grocery chain, for example - and then making that match work in terms of financing and the like. That's the art of the deal.

I'll have more on the potential Sprouts-Henry's deal if and as new information warrants.

- 'The Insider'

[Editor's Note: 'The Insider' column appears regularly in Fresh & Easy Buzz. The opinions in the columns are those of 'The Insider,' and not necessarily shared by Fresh & Easy Buzz. Below are links to 'The Insider's' first column of 2011, and to a selection of 2010 columns, published in Fresh & Easy Buzz.]

~January 5, 2011: Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

2010 columns

~December 30, 2010: Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011

~October 27, 2010: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group

~October 8, 2010: Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

~September 13, 2010: Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

~September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

~August 22, 2010: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

~July 18, 2010: When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

~July 13, 2010: A Few Words on The Life and Death of Veteran Southern California Grocer Roger K. Hughes

~June 27, 2010: The Insider: Will Tesco Acquire Supervalu, Inc. and Change its 'Fresh & Easy' Game in America?

~June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

~May 20, 2010: Welcome to Discountopia USA

~April 29, 2010: Heard on the Street: There's Something About Albertsons ... In Southern California

The UFCW Union Becomes A Player in the Sprouts-Henry's Acquisition Talks...As the Two Chains Move Closer to A Deal

The Insider - Heard on the Street

A new, outside element - the United Food and Commercial Workers (UFCW) union - has injected itself not directly but significantly into the discussions between representatives of Irvine, California-based Henry's Farmers Market and Phoenix, Arizona-based Sprouts Farmers Market regarding an acquisition of the Henry's food and grocery chain by Sprouts.

And in response, Jim Nielsen, president of Henry's Farmers Market, has sent a letter about the union's actions (via e-mail) to all of Henry's employees, along with having a copy of his letter posted in the break rooms at each of the Henry's Farmers Market banner stores in California and Sun Harvest banner markets in Texas. Henry's Farmers Market is owned by City of Commerce-based Smart & Final, which in-turn is owned by private equity firm Apollo Global Management. Sprouts Farmers Market is privately-held.

Below is the full scoop. But first a little background and recent history.

UFCW union's Henry's wage recover program

In August-September 2010, the UFCW union's Grocery Workers United Wage Recovery Program in Ontario (Southern) California launched a campaign, which it says was in response to requests by several Henry's Farmers Market store-level employees, to recover what the retail grocery workers' union says are back wages owed to some of the chain's employees, due to a variety of reasons.

In August and again in September 2010, the union's wage recovery program sent letters to Henry's workers, asking for information regarding various aspects of their employment at the farmers market-style grocery chain, which is non-union.

Additionally, the UFCW set up a website, "Where is My Money Henry's" (here), where it details the wage claim issues and charges regarding Henry's Farmers Market and some of its past and current employees. You can also see the August and September 2010 letters and related information at the website. The site also has a video in which people identified as employees of Henry's Farmers Market talk about the issue.

Recently the union launched a second website, HenryMarkets.Net, which it's also using in the wage recovery program. It's also set up a twitter feed and a Facebook page as part of the program.

The January 28 letter

On January 28, 2011, the union's wage recovery program sent this letter to employees of Henry's Farmers Market. The letter addresses the current acquisition/merger discussions going on - and yes, the talks are continuing - between representatives of Henry's and Sprouts, the news of which I broke in my January 5, 2011 column -

Along with the letter is this direct mail piece, "We've Been Told...You'll Be Sold," directed to Henry's employees from the UFCW. The headline of the piece: "We've heard (Apollo) Henry's is trying to peddle your store to Sprouts from Phoenix, Arizona. You think Henry's (Apollo) was a Bad Dream...Sprouts will be a Nightmare."

The snail mail piece then asks the Henry's Farmers Market employees to fill-out and mail the attached card back to the union if it wants the UFCW to represent the workers in contract and wage negotiations with Henry's senior management.

Henry's response

Yesterday (Thursday, February 3) Henry's Farmers Market's president, Jim Nielsen, sent a letter to all the employees of the Smart & Final/Apollo-owned grocery chain, updating the workers on the acquisition talks with Sprouts Farmers Market, along with addressing the letter sent them by the UFCW's wage recovery program, which the Henry's employees received in their home mailboxes over the last couple days.

The letter only briefly mentions the acquisition talks, explaining to the Henry's employees that the representatives of Henry's Farmers Market and Sprouts Farmers Market are continuing the discussions, but that there is "no completed transaction" yet.

The rest of Nielsen's letter, over half the text, focuses on the letter sent Henry's employees by the union's wage recovery program. In his letter, Jim Nielson says the UFCW union is trying to drive a wedge between Henry's team members and the chain's management, using the acquisition discussions with Sprouts as a tactic to do so.

Nielsen hasn't said much if anything to Henry's Farmers Market employees or others about the union's wage recovery program since it was launched in August-September 2010 - until now, in his letter yesterday to employees of the food and grocery chain.

And the January 2011 letter and direct mail piece to the Henry's employees from the UFCW union's wage recovery program is the first piece we're aware of that the union has sent to Henry's workers since its September 2010 letter and direct mail package.

The title of my January 30, 2011 column - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal - helps explain the concern by Henry's president Nielsen over the latest efforts by the UFCW union, in which it's using the acquisition talks with Sprouts Farmers Market as its angle in the direct mail appeal to employees of the chain. The key reason for that concern: The ownership of Henry's Farmers Market very much wants a deal with Sprouts.

And I can report that although a deal, or as Henry's president Jim Nielsen writes in his letter to employees, "no completed transaction," has yet been inked by the two parties, the discussions and negotiations progressed this week, and the probability that an acquisition, or some form of hybrid merger, between Sprouts Farmers Market and Henry's Farmers Market is much more likely today than it's been since I first reported on the deal talks in my January 5, 2011 column. Of course, the Devil is always in the details.

Stay tuned.

- 'The Insider'

[Editor's Note: 'The Insider' column appears regularly in Fresh & Easy Buzz. The opinions in the columns are those of 'The Insider,' and not necessarily shared by Fresh & Easy Buzz.]

The Sprouts-Henry's deal talks: Follow the story at the links below

January 5, 2011: 'The Insider' - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

January 7, 2011: 'The Insider' - Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

January 8, 2011: Smart & Final-Henry's Tell Employees About Deal Discussions With Sprouts Farmers Market; Confirming 'The Insider's' Reports

January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

January 11, 2011: 'The Insider' - A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

January 24, 2011: 'The Insider' - End-Game Could Be Near in the Sprouts Farmers Market-Henry's Farmers Market Deal Talks

January 30, 2011: 'The Insider' - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal

December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver

November 17, 2010: Smart & Final Pulls the Plug On All Five SmartCo Foods Stores in Metro Denver After Being Open Less Than Five Months

Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

The Insider - Heard on the Street

If my sources are correct - and they're right far more often than they are wrong - one of the first, if not the first, major U.S. food and grocery retailing industry acquisitions to happen in 2011 could be the purchase of the Henry's Farmers Market chain, which is owned by Smart & Final, which is in-turn owned by private equity firm Apollo Management, by privately-held competitor Sprouts Farmers Market.

Smart & Final is based in City of Commerce, (Southern) California. Its Henry's Farmers Market chain has a separate corporate headquarters, in the nearby Orange County city of Irvine. Sprouts Farmers Market is based in Phoenix, Arizona.

My sources, who've asked to remain anonymous for occupational and other related reasons, tell me the deal, which is in discussion between the parties, could happen soon, although it hasn't been finalized and therefore isn't a "done deal."

Behind the potential sale are two key recent motivators, as well as a basic private equity strategy, for Apollo Management, which owns Smart & Final and thus Henry's Farmers Market.

The first recent motivator is that the private equity firm lost at least $40-$50 million (and possibly more), according to my sources, on Smart & Final's SmartCo Foods venture in the Denver, Colorado market in 2010.

Smart & Final opened five SmartCo Foods stores in metro Denver over a three month period, starting in June 2010. In November, less than five months later, it announced it was closing all five stores and pulling out of the market. The five stores are all now closed. [You can read Fresh & Easy Buzz's reports on the move here.]

Second, Apollo plans to launch some sort of public stock offering later this year, and as a result has been evaluating its portfolio of owned companies more closely than it normally would over the last few months.

Additionally, private equity firms like Apollo Management buy companies and entities like Henry's Farmers Market for the express purpose of adding value and eventually selling them. That's how the firms make money for their investors. Apollo has followed that path with Henry's, investing a considerable amount of money in Henry's since acquiring it in October 2007, for the purpose of improving and growing the chain, with the hope doing so will add value and thus result in a profit when it sells it.

Lastly, but far from least, my sources say Sprouts Farmers Market is interested in buying Henry's as a way to grow it business, as well as gaining the secondary bonus of taking one of its three similar format competitors off the market. Sprouts, Henry's and Sunflower Farmers Market all operate very similar formats and stores in the Western U.S.

According to my sources, Apollo Management doesn't currently have Smart & Final up for sale.

The Sprouts Farmers Market and Henry's Farmers Market formats are nearly identical - kissing cousins if you will - and not by accident.

The Boney family, members of which also founded Sprouts Farmers Market in 2002, created the Henry's Farmers Market format, a combination natural-organic-conventional food and grocery store, with a focus on fresh produce merchandised farmers market-style in departments that comprise about a third of a store's total square-footage, decades ago in Southern California.

The first "Henry's" (in terms of the format's inspirational origins) was a fresh produce stand operated under the name "Boney's," which was started on a street corner in San Diego by Henry Boney, in 1943.

Henry Boney's plans didn't include just owning a fruit stand. In the 1950's he branched out, owning and operating three grocery stores in Southern California: Boney's, Bradshaw's and Superama.

In 1956, the Boney family sold the grocery stores and switched formats, opening and building a chain of convenience stores called Speedee Mart, which it sold eight years later, in 1964, to Southland Corp/7- Eleven.

A little over a decade later, in 1976, the entrepreneurial Boney family started a health-food chain, Windmill Farms, which it later sold.

Shortly after selling Windmill Farms, the family started the Boney's Marketplace natural foods' store chain in Southern California, which it renamed Henry's Marketplace in 1997, after Henry Boney's first name, replacing the family's last name as the banner for the stores.

Wild Oats Markets Inc. purchased Henry's Marketplace in 1999, and renamed it Henry's Farmers Market.

Whole Foods Market, Inc. acquired Wild Oats in 2007. One of the first things Whole Foods did after the deal was to sell the Henry's chain, which consisted at the time of 35 Henry's Farmers Market (in Southern California) and Sun Harvest banner stores, to Apollo Management -owned Smart & Final for $166 million. The deal, which was completed in October 2007, also included a distribution center in Riverside County, California.

In 2002, two members of the very same Boney family founded the Sprouts Farmers Market chain in Arizona, along with Scott Wing and Kevin Easler. Stan Boney, the senior member of the family, is the chairman of the board, and Shon Boney is the CEO of Sprouts. Wing and Easler serve on the board. Doug Sanders runs the day-to-day operations of Sprouts, as its president and chief operator officer, reporting to Shon Boney. The first Sprouts Farmers Market store opened in Chandler, Arizona in 2002.

Like the Henry's Farmers Market format and stores, the Sprouts format and stores offer mostly natural and organic products, along with some conventional, and put a major focus on fresh produce, which is merchandised "farmers market-style" in departments that comprise about a third of the stores' total square-footage. A third "farmers market-style retailer is fast-growing Sunflower Farmers Market, which shares a history with both Sprouts and Henry's.

Since acquiring Henry's in October 2007, Smart & Final has added numerous stores, remodeled many existing units, and last year opened the first Henry's Farmers Market store in Northern California, in Elk Grove near Sacramento. A second Henry's store is planned for Walnut Creek, which is in the East Bay Area, about 35 miles from San Francisco. Plans for the store are currently being reviewed by the city.

Additionally, Smart & Final created a new natural and organic private brand for the Henry's stores, called Sun Harvest, which is the name of the stores the chain operates in Texas. The Sun Harvest brand, which has won a number of awards, replaced the former "Henry's" brand, which was the grocer's previous store brand of natural and organic food and grocery products.

Interestingly, Smart & Final has had plans since early-to-mid 2010 to expand the Henry's Farmers Market chain into Idaho, opening the first store in downtown Boise in late 2011 or early 2012. But in late December 2010 the retailer pulled out of the deal, deciding not to sign the lease for the Boise location, where it planned to put the first Idaho store, which it had been negotiating terms on for months. A Smart & Final spokesperson told a Boise television station in late December the retailer decided instead to focus on opportunities closer to home, meaning California and Texas, rather than entering Idaho. But my sources say the decision, which came on the heels of the SmartCo Foods store closures in Denver, has more to do with the possible sale of the Henry's Farmers Market chain to Sprouts Farmers Market, rather than a decision not to open stores in Idaho.

Sprouts Farmers Market, the larger of the two (but not by much) "farmers market-style" format chains in terms of total number of stores, currently has 54 stores in four states: Arizona, California (southern and northern), Colorado and Texas. The stores range in size from 23,000-37,000 square-feet. Annual sales at fast-growing Sprouts Farmers Market are approaching $1 billion, according to my sources.

Like Henry's, Sprouts opened its first store in Northern California, in the Bay Area city of Sunnyvale, in 2010. It has plans to open numerous additional stores in its newest market over the next couple years, including a store in Roseville, near Sacramento, this year, and in Dublin, which is in the Bay Area, in 2011 or 2012.

Sprouts is also making a major push in Texas, its second-newest market after Northern California. So far it plans to open three new stores in Texas this year.

Apollo Management-Smart & Final-owned Henry's Farmers Market currently operates 46 stores in two states - 37 units under the Henry's Farmers Market banner in California and nine stores under the Sun Harvest banner in Texas. The size of the Henry's and Sun Harvest banner stores are very close to Sprouts in terms of square-footage, averaging about 21,000 square-foot at the smaller end, to about 33,000 square-foot at the larger-end.

I estimate Henry's current annual sales to be in the $550 million-$650 million range, based on a variety of source information. The sales information isn't publicly released by the company.

If the deal to acquire Henry's Farmers Market goes through, Sprouts Farmers Market will nearly double both its store count - from 54 to 100 (not counting the new stores both chains plan to open this year) - and annual sales, which will make it not only a much bigger player in the natural-organic retailing sector, but also overall in the Western U.S. food and grocery retailing industry.

Some of the Henry's and Sprouts stores in Southern California are located fairly close together, so I suspect Sprouts Farmers Market would need to sell or close around a half dozen-to 10 or so units - it could be a Henry's store or an existing Sprouts unit, depending on a few variables - in the region if the acquisition becomes a reality.

I see the store duplications or redundancies to be of lessor concern in Texas, where Sprouts has only opened a handful of stores thus far. Sprouts would probably keep all or nearly all of the nine Sun Harvest stores and re-brand them under the Sprouts Farmers Market name.

I'm less sure Sprouts would re-brand the 37 Henry's Farmers Market stores "Sprouts Farmers Market," particularly right away, although eventually doing so makes more sense than it does to not do so. Most likely, if the acquisition does become reality, Sprouts will keep the Henry's Farmers Market name for a while at least, perhaps even considering using it as a second banner. However, based on information from my sources, I doubt if the grocer has even made that decision yet.

As of today, sources tell me the deal is being discussed but hasn't been finalized, which is important to note, as the devil is always in the details, particularly when it comes to acquisitions.

I'll have more on the potential Sprouts-Henry's deal if and as new information warrants.

- 'The Insider'

[Editor's Note: 'The Insider' column appears regularly in Fresh & Easy Buzz. The opinions in the columns are those of 'The Insider,' and not necessarily shared by Fresh & Easy Buzz. This is 'The Insider's' first column for 2011. Below are links to 'The Insider's' 2010 columns, published in Fresh & Easy Buzz.]

~December 30, 2010: Seven Predictions For Tesco's Fresh & Easy Neighborhood Market For 2011

~October 27, 2010: Save Mart CEO Bob Piccinini Poised to Make it to the 'Bigs' as Member of Golden State Warriors' Ownership Group

~October 8, 2010: Incoming Tesco CEO Philip Clarke Needs to 'Imagine' When it Comes to Fresh & Easy Neighborhood Market USA

~September 13, 2010: Reading Philip Clarke's Tea Leaves: Might A Mixed Corporate/Franchise Model Be in Fresh & Easy Neighborhood Market's Future?

~September 3, 2010: How the California Grocers Association and its Members Can Snatch Victory From the Jaws of the Defeat of California's Plastic Bag Ban

~August 22, 2010: Challenges & Opportunities: Tesco's Fresh & Easy Neighborhood Market Will Supply its Northern CA Stores From its Riverside County DC in Southern CA

~July 18, 2010: When it Comes to Northern California - its Competitors are Rome Burning and Tesco's Fresh & Easy Neighborhood Market is Nero Playing the Fiddle

~July 13, 2010: A Few Words on The Life and Death of Veteran Southern California Grocer Roger K. Hughes

~June 27, 2010: The Insider: Will Tesco Acquire Supervalu, Inc. and Change its 'Fresh & Easy' Game in America?

~June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

~May 20, 2010: Welcome to Discountopia USA

~April 29, 2010: Heard on the Street: There's Something About Albertsons ... In Southern California

Deal Announcement From Grocers Sprouts and Sunflower Farmers Market on Tap

The Insider - Heard on the Street

It was in this November 6, 2011 column - Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition - when I first broke the news that kissing cousin format grocery chains Sprouts Farmers Market and Sunflower Farmers Market were engaged in acquisition-merger deal negotiations, with Sprouts' either acquiring Sunflower Farmers Market outright or Sunflower being merged into Sprouts Farmers Market, with Sprouts' as the controlling entity.

On January 25, 2012 [See - January 25, 2012: Sprouts Farmers Market and Sunflower Farmers Market Ink Acquisition-Merger Deal] I reported that Phoenix, Arizona-based Sprouts, which operates 103 stores - a new store opens tomorrow in Yorba Linda, California - in Arizona, California, Colorado and Texas, and Sunflower Farmers Market, which is headquartered in Colorado and has its operations office in Phoenix Arizona, had reached a deal, pending the ironing out of a few details.

Sunflower Farmers Market, which like Sprouts Farmers Market is privately-held, operates 35 stores in Colorado (12), Arizona (7), New Mexico (6), Nevada (2), Texas (2), Oklahoma (1), Utah (3) and California (2).

Those details have now been resolved, according to my sources, and the two farmers market-style grocery chains are preparing to make an announcement about the acquisition-merger deal.

The announcement should come before the end of this week. However, there are some logistical and related issues that could result in the announcement coming a bit later.

Roll up: Sunflower makes two

It's been less than a year since the acquisition-merger deal between Henry's Farmers Market and Sprouts Farmers Market became final on April 18, 2011.

In January 2011, I broke the news in this column - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards - that Sprouts' and Apollo/Henry's were in acquisition/merger negotiations.

I continued to report extensively on the deal talks throughout January 2011 and into February. [See those reports and columns here and here.]

On Wednesday, February 16, 2011, the two grocers announced the deal. [See: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market. The day before, on February 15, 2011, I published this: Sprouts Farmers Market's Acquisition of Henry's to Be Announced This Week, As Early As Wednesday.

Henry's was owned at the time by private equity firm Apollo Global Management (through its Smart & Final food retailing company), which was founded by Leon Black, who remains its chief deal-maker.

Apollo and Sprouts' founders and part-owners merged the Henry's Farmers Market chain into Sprouts Farmers Market, with Henry's going away and Sprouts' in control of the combined chains.

The deal made Apollo Global Management the majority owner of Sprouts Farmers Market.

In addition to Apollo, Sprouts has about 200 investors, most of them individuals. The investors range from a few who hold a considerable amount of stock to others who hold a few shares. Sprouts Farmers Market is not a publicly-held company, however.

Stan and Sean Boney, the chairman and CEO of Sprouts respectively, and board members Scott Wing and Kevin Easler - the four men founded Sprouts Farmers Market in 2002 - have minority ownership stakes in Sprouts Farmers Market, along with the investors. The individual investors were in place before Apollo's involvement.

Doug Sanders is Sprouts' president. He's responsible for the chain's operations, reporting to Sean Boney. Jim Nielson, who was president of Henry's Farmers Market, joined Sprouts Farmers Market last year as part of the merger deal. He is Sprouts' chief operating officer, reporting to Doug Sanders.

Co-founders Stan Boney and CEO Sean Boney, who is Stan's son, had wanted to acquire the Henry's chain, which was founded by Stan Boney's father Henry, for many years.

Stan Boney was the chairman and CEO of the then family-owned Henry's chain until 1999, when it was sold to Wild Oats Markets, which was acquired by Whole Foods Markets in 2007. Three years later he started Sprouts Farmers Market with his son and the two partners/co-founders.

The deal with Apollo Global Management was a good one for Sprouts, not only because it brought Henry's in-house but because it also provides the chain with a constant source of investment capital, private equity firm and majority-owner Apollo, which is also something the Boney's were after to help fuel their growth plans for Sprouts Farmers Market.

Apollo has even more ambitious growth plans for the chain that the founders did, which of course is what private equity firms do - grow a business and then eventually sell it and make a profit.

The deal also took one of Sprouts' two farmers market-style kissing cousin format cousins out as a direct competitor. Instead, the kissing cousin, Henry's, moved into the same house, called Sprouts Farmers Market.

That other kissing cousin competitor is, of course - Sunflower Farmers Market.

And soon it will join its farmers market-style format kissing cousins; all three - Sprouts, Henry's and Sunflower - under the same roof, and the roll up will be completed.

- The Insider

[Readers: Go to these links - Apollo Management, Mike Gilliland, Sprouts Farmers Market, Sprouts-Henry's Deal, Sunflower Farmers Market, The Insider,  Henry's Farmers Market - for an extensive selection of related stories.]

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.]

The Sprouts-Henry's Deal: New Website Reunites the Two Grocery Chains As 'One Farmers Market'

[Related Stories: February 16, 2011: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market; February 15, 2011: 'The Insider' - Sprouts Farmers Market's Acquisition of Henry's to Be Announced This Week, As Early As Wednesday; and January 5, 2011: 'The Insider' - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards.]

In conjunction with the announcement today that Phoenix, Arizona-based Sprouts Farmers Market has acquired Smart & Final-owned Irvine, California-based Henry's Farmers Market, the new combined farmers market-style food and grocery retailing chain, to be operated by Sprouts and majority-owned by New York City-based private equity firm Apollo Global Management (which also will continue to be the majority-owner of Smart & Final), has created and launched a new website: 1farmersmarket.com.

Apollo Global Management, the financial force behind the Sprouts-Henry's deal, was founded by Leon Black, who continues to serve as the private equity firm's chairman and chief deal-maker. [See - January 11, 2011: A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City.]

The new "family" website tells the story of the closely-related history of the two farmers market-style food and grocery retailing chains, Henry's and Sprouts - which as we've detailed extensively in Fresh & Easy Buzz were both founded by the Boney family - and how the deal announced today merges or reunites the two grocers back into "one family."

Below (in italics) is how the story is told on the new website:

Sprouts Announces Combination with Henry's, Creating Leading Farmers Market Specialty Retailer

Apollo Management to be Majority Owner of Combined Company

Sprouts Farmers Market ("Sprouts") and Henry's Farmers Market ("Henry's"), two companies originally founded by the Boney Family that have operated under separate owners for almost a decade, announced the execution of definitive agreements to combine operations under the majority ownership and sponsorship of Apollo Management, L.P., one of the world's leading private equity firms.

The combined company will operate under the Sprouts Farmers Market name and will be one of the largest players in the exciting, fast-growing "farmers market" specialty segment of the retail food industry, as well as one of the largest grocers in the Western U.S. with annual revenues in excess of $1 billion. The transaction is expected to close early in the second quarter 2011.

The combined company will be managed from an operating perspective by the Boney family and will eventually operate all stores under the single name Sprouts Farmers Market. The new company will have 98 stores and more than 7,000 employees at the time the transaction is closed. The combined company plans to open up to 10 additional new stores during 2011.

Andrew S. Jhawar, a Senior Partner at Apollo and Co-Head of Apollo's Consumer and Retail Industry Group said, "We are very excited about partnering with Stan Boney, Shon Boney, Doug Sanders and the thousands of employees at Sprouts and Henry's to help reunite these two great companies under the Boney family's leadership. After the combination, Sprouts will be one of the largest, growth oriented specialty retailers in the U.S. with a focus on natural and organic products. Apollo looks forward to supporting the management team's vision for significant future new store growth across the country."

Stan Boney, Chairman of the Board at Sprouts said, "The combination of Sprouts and Henry's is an exciting chapter in our family's lives, and we look forward to continuing to deliver on our mission of helping America eat healthier, live longer and spend less. Apollo is one of the most experienced and successful private equity firms in the nation and we are excited about their support for our business model and look forward to working together with Andy and his team."

The combination of the Sprouts and Henry's businesses will occur through an equity investment and recapitalization of the existing Sprouts business by Apollo. A concurrent purchase of the Henry's business will be made from Commerce, California based Smart & Final Holdings Corp., an Apollo portfolio company since 2007. Following the transaction, Apollo will be the majority owner of Sprouts and will continue to be the principal equity owner of Smart & Final Holdings.

As closely held companies, neither Sprouts nor Henry's discloses financial information. Terms of the transaction weren't disclosed.

Roots in San Diego

The namesake of the Henry's stores was Henry Boney, a San Diego entrepreneur who opened his first business, a fruit stand at the corner of 70th and University in San Diego, in 1943. Over the years, he and his family started and sold many retail businesses, including Speedee Mart, Boney's and Windmill Farms. Mr. Boney was also well known in San Diego political and charitable circles and served on the San Diego County Board of Supervisors.

The second generation of Boney's stores were opened in 1969 by Henry's sons, Stan and Steve. The name was changed to Henry's Marketplace in 1997. The Boney family ran Henry's until 1999, when the stores were sold to Wild Oats Markets, Inc. In 2007, Whole Foods Market, Inc. purchased Wild Oats and sold the Henry's stores to Smart & Final Holdings Corp., which operates 290 stores under four store banners in the western U.S. Currently, Henry's operates 43 total store locations, comprised of 34 stores in California and 9 stores in Texas (operating under the Sun Harvest banner).

Henry's son, Stan, and his grandson, Shon, along with other family friends, returned to the natural foods business in 2002 when they opened the first Sprouts Farmers Market store in Chandler, Arizona. Sprouts has grown rapidly since, with 55 stores across Arizona, California, Colorado and Texas. Sprouts was named the Western Retailer of the Year in 2010 by Gourmet News magazine.

The stores share more in common than their lineage. Both Henry's and Sprouts are farmers market style grocery stores, with an informal, wide-open store design and a strong emphasis on fresh, high quality produce at a great value. Averaging about 26,000 square feet in size, the stores are easy to shop and navigate yet still have extensive offerings in virtually every major category (produce, grocery, dairy, frozen, meat, seafood, bakery, deli, bulk, vitamins, body care, household products, beer and wine) — largely natural and organic. All of these elements have been hallmarks of the Boney Family's retail establishments since the very beginning.

"For all the businesses he built during his career, my father would marvel at the efficiency with which we bring produce and natural foods to so many customers today and at such a good value," added Stan Boney. "And now, by reuniting these stores that he inspired, we're going to become even better at it."

Apollo Management, L.P. and its subsidiaries are affiliates of Apollo Global Management, LLC (together with its subsidiaries, "Apollo Global Management"), a leading global alternative asset manager. Apollo reported $57.8 billion in assets under management as of September 30, 2010. Apollo's investments in retail and consumer-oriented businesses have included Smart & Final, Claire's Stores, CKE Restaurants, General Nutrition Centers, AMC Entertainment, Rent-A-Center, Ralphs Grocery Company, Dominick's Supermarkets, Zale Corporation and Proffitt's Department Stores.

The new Sprouts-Henry's family website also has links to the existing Sprouts Farmers Market, Henry's Farmers Market and Sun Harvest Farmers Market websites, as you can see here. SunHarvest is the banner Henry's uses in Texas. The Sun Harvest stores are part of the deal.

The site also includes a F.A.Q. page, in which a number of questions about the acquisition/merger are posed - and answered.

For example, the first Q/A is:

Q. What will happen to the Henry's and Sun Harvest names?

A. For the time being, nothing. Until the transaction closes, which we hope will be early this spring, Henry’s/Sun Harvest and Sprouts will remain separate and distinct entities. After that, the likelihood is that later in 2011 or 2012, all Henry's and Sun Harvest stores will become Sprouts stores. However, we know that it is important that we keep strong ties to the name “Henry’s” and all the good will that has been built up over the years, so we will work hard to find ways to keep that alive.

[Click here to see the other Questions and Answers about the deal on the F.A.Q. page.]

Additionally, the 1farmersmarket.com website features a list of the combined Sprouts Farmers Market (55 units) and Henry's Farmers Market (36 units in California)/Sun Harvest Farmers Market (10 markets in Texas) stores, located in California, Nevada, Arizona, Colorado and Texas, along with offering pages for media and general contact information, as well as employment info.

The combined Sprouts-Henry's chain (101 stores) will employ about 7,000 workers, according to Kim Rockley, a spokesperson for Sprouts Farmers Market.

In addition, according to Rockley, current plans call for the chain, which will be operated by Sprouts out of its existing corporate headquarters in Phoenix, Arizona, to open 10-15 new stores a year, over the next few years. Sprouts' CEO Doug sanders says plans call for opening 10 new stores this year, and 10-12 new units in 2012. It's Apollo Global Management's goal to grow Sprouts Farmers Market into a national chain, eventually expanding beyond the western states. As we've previously reported in Fresh & Easy Buzz, annual sales of a combined Sprouts and Henry's will be about $1 billion.

Both Sprouts Farmers Market and Henry's Farmers Market had numerous new stores in the pipeline pre-deal, including in Northern California, which is the newest market region for both chains. Sprouts (in Sunnyvale) and Henry's (in Elk Grove) opened their first stores respectively in Northern California in 2010. [See: Northern California Special Report.]

Social media

Sprouts Farmers Market has also integrated its own existing Twitter feeds and Facebook page into Henry's existing Twitter feed and Facebook page.

In fact, two tweets posted today announcing the deal are the first ones that have been made on the Henry's Farmers Market Twitter feed since July 2010. We noted the inactivity on the Henry's feed previously in Fresh & Easy Buzz, and on our own Twitter feed.

An announcement about the deal was also made on the Henry's Farmers Market Facebook page, which has been regularly updates by Henry's right up until today's announcement.

Sprouts Farmers Market operates an existing Facebook page, along with multiple Twitter feeds, covering each of the regions where it operates stores.

The combined Sprouts-Henry's chain will have 101 farmers market-style food and grocery stores in five Western U.S. states: California, Nevada, Arizona, Colorado and Texas.

Additionally, because the majority of the Henry's stores are in Southern California, Sprouts' store- count in the region will more than double, making it a much bigger and tougher player in the highly-populated region.

Note to Readers

[You can read about all of the parties involved in the deal in the Fresh & Easy Buzz archives. Just click on the following links - Henry's Farmers Market, Smart and Final, Sprouts, Sprouts Farmers Market, Sprouts-Henry's Deal and The Insider. Also see the following related links for more stories about Sprouts, Henry's and Smart & Final: Fresh and Easy Southern California, Fresh and Easy Northern California, Northern California, Northern California Special Report, Roseville CA, Sunflower Farmers Market. Use the "older posts and "newer posts" links at the bottom of each linked page for additional pages/stories.]