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Cardenas_Markets_store_banner.jpg Cardenas Markets
Together, Cardenas and Tony’s will create a supermarket retailer with annual sales of approximately $1.8 billion from 78 stores in three Western states and the Chicago area.

Cardenas Markets to merge with Tony’s Fresh Market in Apollo acquisition

Hispanic and specialty grocers to form leading multi-ethnic food retailer

Investment firm Apollo Global Management plans to buy Hispanic grocer Cardenas Markets and combine it with recent acquisition Tony’s Fresh Market to form a nearly $2 billion, ethnic-focused supermarket operator.

Financial terms of the deal, announced late yesterday, weren’t disclosed. Under the transaction, funds managed by Apollo affiliates have agreed to acquire Cardenas from investment funds affiliated with global investment firm KKR, New York-based Apollo said.

Plans call for Cardenas and Tony’s to continue to operate under their current brands and local leadership. Apollo said Cardenas Markets CEO Doug Sanders will remain in that role and serve as chief executive of the combined company, while Frank Ingraffia will continue to serve as the CEO of Tony’s Fresh Market.

Tony's Fresh MarketTonys_Fresh_Market-Burbank_IL-exterior.jpg

Apollo unveiled its deal to acquire Chicago-area specialty grocer Tony’s Fresh Market in April.

Together, Cardenas and Tony’s generate revenue of about $1.8 billion from 78 stores in three Western states and the Chicago area, enabling them to benefit from greater scale and complementary capabilities in a larger operating footprint, Apollo noted.

“Cardenas has grown significantly over the last several years under Doug’s leadership, and we are excited to accelerate its growth in combination with Tony’s in this next phase,” Andrew Jhawar and Joanna Reiss, partners at Apollo Private Equity, said in a joint statement. “We are excited to once again partner with Doug following our highly successful investment in Sprouts Farmers Market, which Doug led as CEO under Apollo funds’ ownership. Cardenas and Tony’s have robust positions in the ethnic grocer space and together can leverage best practices across their complementary go-to-market strategies, merchandising, customer loyalty programs and more. This transaction will combine the best of both retailers and provide greater opportunities and scale for the respective brands and teams as they continue to bring quality, affordable groceries to diverse communities.”

Apollo announced its acquisition of Itasca, Ill.-based Tony’s Fresh Market in April. Launched in 1979 by Italian immigrants Tony Ingraffia and Domenico Gambino, Tony's operates 19 specialty grocery stores across the Chicago market and neighboring communities in Illinois and is known for its wide assortment of fresh produce, prepared foods and multicultural offerings. Apollo reported that several more stores are now in development. 

“Cardenas Markets shares similar values as Tony’s, and I am thrilled to combine forces with Doug and the Cardenas team to continue to strengthen our operations and build on our differentiated offering," Tony's Fresh Market CEO Frank Ingraffia said in a statement. "Our brands have complementary strengths, and this partnership should give us more tools and expertise to further scale and serve our customers with fresh, healthy and affordable foods.” 

Ontario, Calif.-based Cardenas currently operates 59 stores under the Cardenas Markets (51 locations), Los Altos Ranch Markets (seven locations) and Cardenas Ranch Markets (one location) banners in California, Nevada and Arizona. Founded in 1981, the retailer is one of the nation’s largest Hispanic grocery chains and sources products from over 500 vendors.

Doug Sanders-CEO chairman-Cardenas Markets.jpgPlans call for Cardenas Chairman and CEO Doug Sanders to serve as chief executive of the combined company. (Photo courtesy of Cardenas Markets)

And Cardenas’ store count already is slated to grow even before the Tony’s combination. Last week, Cardenas unveiled a deal to acquire fellow Latino grocer Rio Ranch Market, expanding its Southern California footprint. Based in Fontana, Calif., Rio Ranch operates six supermarkets in San Bernardino, Riverside, Chino, Perris, Banning and Fontana as well as a warehouse in San Bernardino. The transaction is expected to close by mid-July.

“Since joining Cardenas, we have made great progress in growing and enhancing our operations with KKR’s support, and I am thrilled by the opportunity for our team to now partner with Frank and the Tony’s team, leveraging our collective strengths. Together, as two of the highest-quality Hispanic and ethnic grocers, we can deliver even greater value to the communities we serve,” commented Sanders, who also serves as Cardenas’ chairman.

“Apollo private equity has an extensive best-in-class track record of success in food retail, and I am thrilled to partner with Andy Jhawar and the Apollo team again in this exciting next chapter for Cardenas,” he added. “I would also like to thank KKR, which has been a tremendous strategic partner over the past six years, helping us grow and professionalize the business.”

New York-based KKR acquired Cardenas Markets from the Cardenas family in 2016. Apollo noted that, under KKR’s ownership, Cardenas doubled in size via organic growth and strategic acquisitions.

“We are immensely appreciative of everything Doug and the management team have done to build a great company dedicated to bringing fresh and affordable groceries to the communities that it serves, consistent with the values that the Cardenas family instilled in the business,” stated Vishal Patel, a managing director at KKR. “We are confident that Apollo and Tony’s Fresh Market are the right partners for Cardenas as it enters its next chapter of growth.”

The transaction is expected to be finalized by the third quarter, pending customary closing conditions, according to Apollo. Solomon Partners acted as lead financial adviser to Cardenas and KKR. BMO Capital Markets also advised, and Kirkland & Ellis LLP served as legal adviser to Cardenas and KKR. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal counsel to the Apollo funds.

“We could not be more proud of what we’ve achieved together in this transaction with Cardenas’ extraordinary CEO Doug Sanders, KKR and the exceptional Cardenas team, whose over 5,700 employees have helped the company serve as a pillar of dozens of Latino communities in the Western U.S. for over 40 years, particularly during the pandemic,” Scott Moses, managing director and head of grocery, pharmacy and restaurants investment banking at New York-based Solomon Partners, told Supermarket News in an email.

“I first met Doug nearly 17 years ago, when he was with Sprouts, which was at that time a small, growing specialty grocer with just a few stores in Phoenix,” Moses said. “We then worked together on Sprouts’ mergers with Henry’s and Sunflower in 2011 and 2012, respectively, to build the foundation from which Doug and Apollo then transformed Sprouts into a multibillion-dollar public company, with hundreds of stores and over 35,000 employees across the country.”

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