United Natural Foods Inc. on Thursday said it had agreed to purchase California-based specialty foods distributor Tony’s Fine Foods for $195 million, with the intention of using the business as a platform to build a nationwide perimeter offering.
West Sacramento, Calif.-based Tony’s Fine Foods, which specializes in deli, bakery, food service, specialty, and perishable products, will operate as a separate division of UNFI, in a manner similar to UNFI’s organic produce division, Albert’s Organics, said Steven Spinner, UNFI’s CEO. Karl and Scott Berger, Tony’s third-generation leaders, will stay with the company.
Tony’s has more than $700 million in annual sales and 700 associates. It distributes specialty deli, cheese, meat, seafood, and bakery items to retailers on the West Coast.
“The beauty of the Tony’s organization is the intellectual capital that they have around the acquisition of these very unique and in some cases proprietary products,” Spinner said in a conference call discussing the acquisition. “And so the real value for us is being able to take that model and move it across the country into the markets where there is a terrific need for these products.”
Spinner has long discussed UNFI’s desire to expand its distribution range through specialty acquisitions. He said UNFI’s prior attempts at building such capabilities in-house had proven “too slow and painful.”
“I could not think of a better acquisition for UNFI strategically,” Spinner said. Tony’s was founded in 1934 as the Tony Ingoglia Salami Co. It has grown through acquisitions to own and distribute brands including Alcatraz Bay Seafoods, North Coast Fisheries, Gold Rush Creamery and Diana Supreme.
The acquisition will consist of $187.7 million in cash and approximately 112,000 shares of UNFI stock. The company said it would fund the deal through its debt facility. The transaction is expected to close in the fourth quarter.
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