Dive Brief:

• Private equity firm Apollo Funds announced that funds managed by its affiliates have agreed to acquire Cardenas Markets — the 59-store Hispanic grocer with stores in California, Nevada and Arizona — from current owner KKR. Terms of the deal were not disclosed.
• Once the transaction is complete, Apollo Funds will combine Cardenas with the recently acquired Tony’s Fresh Market to create a nearly 80-store Hispanic and ethnic grocer that has around $1.8 billion in combined revenues. The companies expect the transaction to close by the third quarter of this year.
• Both Cardenas and Tony’s will continue operating under their existing brands and leadership, and expect to benefit from improved economies of scale. Doug Sanders, CEO of Cardenas, will serve as chief executive of the combined companies, while Frank Ingraffia will continue as CEO of Tony’s. 

Dive Insight:

Apollo announced plans to take over Cardenas Markets in the wake of the chain’s announcement last week that it plans to purchase six Rio Ranch Market supermarkets — a move that will give Cardenas added heft in the Southern California market.

Cardenas, which was founded in 1981, currently has more than 5,700 employees, according to an emailed statement from Scott Moses, managing director of Solomon Partners, which advised Cardenas on the transaction with Apollo.

“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 in the announcement about its intention to acquire Cardenas and merge it with Tony’s.

The pending combination of the two retailers under Apollo’s ownership is the latest in a series of grocery industry transactions involving the private equity company.

Apollo announced plans to buy Tony’s Fresh Market in April, noting that it would continue efforts by the Chicago-based chain of 18 grocery stores to provide “healthy and affordable food” to areas where it operates. Joanna Reiss, an Apollo partner and the firm’s co-lead of impact investing, said at the time the firm hoped to “further strengthen and scale” Tony’s.

Weeks after agreeing to acquire Tony’s, Apollo said it would sell a majority stake in The Fresh Market to South American retailer Cencosud in a $676 million deal. Apollo acquired The Fresh Market in 2016, taking on significant debt as part of the acquisition. 

In May 2020, Apollo paid $1.75 billion for a minority stake in Albertsons ahead of the chain’s initial public offering the following month. In April 2019, Apollo acquired warehouse chain Smart & Final for $975 million, then sold the retailer to Bodega Latina Corp. for $620 million plus debt two years later.

Apollo also has been an investor in Sprouts Farmers Market, buying a majority stake in the produce-focused specialty grocer in 2011 and merging it with Henry’s Farmers Market ahead of an initial public offering in 2013. Sanders served as CEO of Sprouts under Apollo’s ownership, helping the private equity firm turn a $200 million investment into a $2 billion profit, The Wall Street Journal reported in 2015.