Grand Rapids, Mich.-based grocery retailer/distributor SpartanNash is acquiring Caito Foods Service, the largest produce distribution business in Indianapolis.

Caito Foods reported sales of more than $600 million in fiscal 2016, which ended Sept. 30.

The $217.5 million cash acquisition (plus some transaction costs), announced Nov. 4, also includes Caito’s Blue Ribbon Transport operation.

The acquisition also could be worth an additional $12.4 million to Caito Foods collectively if the business achieves certain performance targets, the companies said in a joint news release.

Under the terms of the agreement, SpartanNash will acquire Caito’s produce distribution business, fresh-cut produce business, and the latter’s new Fresh Kitchen facility, due to open early in 2017 and which is designed to process and package fresh-prepared foods.

SpartanNash, a Fortune 400 company whose core businesses include distributing grocery products to independent grocery retailers, national accounts, its corporate owned retail stores, and U.S. military commissaries, serves customer locations in 47 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. The company currently operates 159 supermarkets, primarily under the banners of Family Fare Supermarkets, Family Fresh Market, D&W Fresh Market and SunMart.

Acquiring Caito Foods, a family-owned operation since its founding in 1965 by brothers Philip and Joseph Caito, will help SpartanNash expand into the “fast-growing, freshly-prepared center-plate and side-dish categories,” the company said in a news release.

Caito Foods does business with grocers and foodservice operators in 22 states in the Southeast, Midwest and East regions of the U.S. The company has distribution centers in Indianapolis, as well as Newcomerstown, Ohio; and Lakeland, Fla.

Caito’s new 120,000-square-foot Fresh Kitchen will process, cook, and package fresh protein-based foods and complete meals. The $32 million facility is expected to be operational in the first quarter of 2017, the company said.

Blue Ribbon Transport offers logistics services across North America.

“We are excited about this opportunity to expand our presence in serving some of the fastest-growing categories in grocery, including fresh produce, value-added fruits and vegetables, and protein-based prepared food,” said SpartanNash Chairman and CEO Dennis Eidson said in a news release.

He said that Caito’s and SpartanNash’s distribution footprints are complementary.

SpartanNash did not immediately return a telephone call for additional comment.

Caito and Blue Ribbon Transport will become part of SpartanNash’s food distribution segment following the close of the transaction, which is expected in January, subject to regulatory approval.

Caito’s management staff, including president Robert Kirch and Blue Ribbon Transport president David Frizzell, will join SpartanNash upon completion of the transaction. Both will continue in their roles and oversee the acquired operations which will remain in Indianapolis. All of Caito’s more than 1,000 employees will “have the opportunity” to retain their jobs, Matthew Caito, executive vice president and chief administrative officer, said.

“An important message is our entire senior management team is staying to lead Caito Foods and what we do. We fully expect it will be business as usual,” Caito said.

Both of Caito Foods’ founders, who now serve on the board, approved of the acquisition, which had been in the works “for some time,” Matthew Caito said.

“It’s with great emotion we’ve made this decision, but frankly it’s an opportunity for our people and us to grow and reach more consumers with fresh product,” he said.

 

 
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