Ahold Delhaize and Centerbridge Partners announced they have entered into a definitive agreement to acquire FreshDirect, the online grocer based in New York City. Ahold Delhaize will acquire the majority share – 80 percent – funded by cash on hand, and Manhattan-based private equity firm Centerbridge Partners, will be a minority equity investor with a 20 percent stake.
After the deal closes, FreshDirect will retain its brand name, report to a seven-person board comprised of members of Ahold Delhaize and Centerbridge, and continue to independently operate out of its facility in the Bronx. Current FreshDirect CEO David McInerney is expected to remain chief executive and report to the new board. McInerney, Joe Fedele (who departed in 2004) and Jason Ackerman founded the online retailer in 1999. Ackerman left FreshDirect in 2018. Prior to this announced acquisition, JP Morgan Asset Management held the largest stake in FreshDirect.
Financial terms of the deal were not disclosed. The transaction is expected to close in the first quarter of 2021, following the satisfaction of customary closing conditions, including regulatory clearance.
Frans Muller, Ahold Delhaize’s chief executive officer, said, “FreshDirect is a leading local brand in the fast-growing online grocery sector in the New York City metro area, one of the most important ecommerce food markets in the United States. With its unparalleled quality of fresh food, exceptional brand recognition, and dedicated people, it has generated remarkable customer loyalty. This acquisition further propels our omni-channel evolution. It is a great addition and fit for our portfolio of leading local brands. The deal allows us to reach additional customers in the New York trade area and therefore will add incremental sales to the business. It further enables us to address customers’ growing preference for convenient ways to shop. Finally, we are excited to have Centerbridge alongside of us in this venture and believe our combined focus, expertise, and scale will help us maximize the success of FreshDirect going forward.”
McInerney said, “We are strong believers that the future of grocery retail involves getting customers the best quality food, exactly when they want it, with the best customer service. We have built FreshDirect into a reliable and recognizable business to serve this purpose. This transaction marks an important milestone in the continued growth of FreshDirect. I believe Ahold Delhaize’s global scale, focus on strong, leading local brands, and ability to utilize cost-of-goods synergies, will allow FreshDirect to achieve its full potential.”
FreshDirect is one of the leading online/grocery delivery merchants in the U.S. While the majority of its business is in Metro New York (particularly in the five boroughs of New York City), the company has expanded its distribution network over the past few years to include the Delaware Valley and the Washington, DC area. FreshDirect has been privately-held since its founding 21 years ago and industry analysts estimate the company’s annual sales to be in the $650 million range. More than 60 percent if its revenue comes from perishables sales.
Acquiring FreshDirect gives Ahold Delhaize the platform to continue its omnichannel growth and although it is technically a stand-alone operation, several trade observers noted that they expect to see some linkage with Ahold Delhaize USA’s Peapod operation and its affiliates.