Grocery Outlet Chain Changes Hands

EMERYVILLE, CA—Grocery Outlet, Inc., an “extreme-value” grocer based here, has entered into a definitive agreement to be acquired by affiliates of Hellman & Friedman LLC along with Grocery Outlet's senior management team from its principal owner, Berkshire Partners LLC. The terms of the transaction were not disclosed.

“Grocery Outlet's unique operating model delivers tremendous value to consumers and suppliers alike,” said Erik Ragatz, managing director of Hellman & Friedman. “With a network of high quality independent operators and an outstanding base of employees, Grocery Outlet is very well positioned to continue on its growth trajectory.”

Grocery Outlet offers branded grocery products at significant discounts through a unique sourcing model of purchasing discounted surplus inventory directly from over 3,000 supplier partners. The company was founded in 1946 by Jim Read and continues to be operated by the Read family, with third-generation family members MacGregor Read and Eric Lindberg currently leading the business as Co-Chief Executive Officers. Grocery Outlet has a network of more than 210 stores across six states, which are managed principally by local, independent operators.

“We are proud of Grocery Outlet's 68 year history of bringing extreme value to our customers and building trusted partnerships with our suppliers,” Read and Lindberg said in a statement. “We thank Berkshire Partners for their contributions to Grocery Outlet's growth and development over the past five years and welcome Hellman & Friedman as our new partner. We are excited to continue to build on the success of Grocery Outlet for our customers, independent operators and employees.”

“We look forward to partnering with Eric and MacGregor and the rest of the management team as the company moves into its next phase of growth,” Ragatz added.

Chris Hadley, managing director of Berkshire Partners, said, “We are proud to have been part of Grocery Outlet's successful growth over the past five years. During our partnership, we worked closely with Grocery Outlet's exceptional management team to enhance the company's capabilities and to grow the company's store base. We look forward to seeing the next stage of the company's development.”

Barclays and Goldman, Sachs & Co. served as financial advisors to Grocery Outlet in connection with the transaction. Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. served as financial advisors to Hellman & Friedman. Weil, Gotshal & Manges LLP, Simpson Thacher & Bartlett LLP and Sullivan & Cromwell LLP served as legal advisors to Grocery Outlet, Hellman & Friedman and Grocery Outlet's senior management, respectively.

Grocery Outlet offers extreme bargains on brand name merchandise, with prices often up to 60% cheaper than conventional retailers. The largest “extreme-value” grocer in the U.S., Grocery Outlet has over 210 locations in California, Idaho, Nevada, Oregon, Washington, and Pennsylvania.