Apollo Funds to Acquire Cardenas Markets from KKR

Private equity player Apollo Funds has announced that it will acquire Cardenas Markets, a 59-store Hispanic grocery chain operating in the Southwest, from KKR. 

Apollo said it plans to combine Cardenas Markets with a previous acquisition, Chicago-based Tony’s Fresh Market, to create one of the largest Hispanic grocery chains in the US with a total of nearly 80 stores generating about $1.8B in total revenues.

Terms of the acquisition, which is expected to close by the third quarter, were not disclosed.

The Cardenas and Tony’s groceries will continue operating under their existing brands and leadership, Apollo said in a release. Apollo said both brands will benefit from economies of scale, complementary capabilities and an expanded operating footprint.

“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 said.

Operating in California, Nevada and Arizona, Cardenas, founded in 1981, features a differentiated store concept providing specialties groceries sourced from more than 500 venders. Cardenas Markets recently announced it is purchasing six Rio Ranch supermarkets in Southern California.

The acquisition of the 18 Midwest stores that make up Tony’s Fresh Market comes a month after Apollo sold its majority stake in The Fresh Market to South American retailer Cencosud for $676M. 

The deal with Cencosud, which transfers a 67% stake to the Chilean company, is subject to regulatory approval. Apollo Funds and the Berry family remain as minority stakeholders.

Apollo bought The Fresh Market, a specialty food grocer with 159 stores, in 2016 and took it private. The Fresh Market recently filed with the SEC for an initial public offering in July.

In its filing, the company said it is remodeling stores to give its customers an “Old World European marketplace” experience offering restaurant-quality meals. The Fresh Market also has been expanding its e-commerce sales, with Instacart delivery and curbside pickup available at all of its stores.

The filing noted that the debt incurred by Apollo to acquire The Fresh Market stood at $933M as of last October. Apollo said $265M in cash from Cencosud’s purchase price will go toward reducing The Fresh Market’s net leverage to 2.7 EBITDA.

Cardenas is led by CEO Doug Sanders, who was the CEO of Sprouts Farmers Market in 2011 when Apollo bought a majority stake in the company and merged it with Henry’s Farmers Market ahead of an IPO in 2013.