In a combination of retailer-owned wholesale grocery co-operatives, Associated Wholesale Grocers and Affiliated Foods Midwest said Thursday they would merge their respective distribution businesses.
The deal has been approved by the boards of the respective companies and is expected to close later this year. The combined companies would operate under the AWG name. Financial terms were not disclosed.
The companies in a release said the combination would benefit member retailers by lowering their cost of goods and expanding geographic distribution capabilities.
“This exciting endeavor is exactly what we need to allow our retailers to compete, grow and be profitable,” Martin Arter, president and CEO of AFM, based in Norfolk, Neb., said. "The synergies between our joint cooperatives will help our retailers thrive. Our members benefit with a substantially lower cost of goods. Much credit is due to the vision of both AWG’s and AFM’s Board of Directors to see the possibilities of what we could become.”
AFM is a retailer-owned cooperative supplying members that operate over 800 stores in 15 states. AFM operates warehouses totaling 2.1 million square feet in Norfolk, Kenosha, Wis., and Elwood, Kan. Based in Kansas City, Kan., AWG is a retailer-owned cooperative supplying members that operate more than 3,000 stores in 30 states and operates nine DCs totaling 7 million square feet, in Kansas City, Springfield, Mo., Oklahoma City, Goodlettsville, Tenn., Southaven, Miss., Fort Worth, Texas, Pearl River, La., Fort Scott, Kan., and Memphis.
“We are excited about joining forces and combining the two cooperatives. Expanding our collective distribution areas into several new adjoining states and adding over 800 new member stores will make our unified cooperatives stronger together, leveraging not only the additional scale and buying power but also employing and implementing the best practices of each that have been developed over the 80 to 90 years that our respective cooperatives have been in business," said David Smith, president and CEO of AWG.
"Combining our distribution center networks and support infrastructure will allow us to more effectively serve our growing numbers of independent member-retailers. This unified business will further strengthen our relationship with the vendor community, reduce operating expenses and subsequent cost of goods, and enhance our ability to support and serve our growing membership," Smith added.
The alliance is subject to certain conditions, including the approval by AFM shareholders.
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