SuperValu to Buy Richfood for $858 Million

SuperValu Inc., the largest U.S. distributor of food to supermarkets, agreed to buy Richfood Holdings Inc. for about $858 million in cash and stock to build its business in the mid-Atlantic U.S. SuperValu would pay $18.50 a share, half in cash and half in stock, for each Richfood share. The company also would take on about $642 million in debt. The offer is a 24% premium over Richfood’s closing price Tuesday. Richfood is the largest distributor in the mid-Atlantic region, operating about 100 supermarkets in states such as Virginia and Maryland. Minneapolis-based SuperValu said the combined company would have about $20.8 billion in annual sales. The two companies also operate a total of 296 grocery stores under names including Metro, Farm Fresh, Shoppers Food Warehouse, Cub Foods and Shop ‘n Save. SuperValu said the acquisition would add 3 cents to 6 cents per share to earnings in the fiscal year ending February 2000, and about 12 cents to 16 cents in the fiscal year ending in 2001. Richmond, Va.-based Richfood rose $2 to close at $16.88, and SuperValu gained 50 cents to close at $24.81, both on the NYSE. The deal was announced after the close of trading.