Apollo agreed to acquire Cardenas Markets, a grocery retailer focused on serving the Hispanic community, from investment funds affiliated with KKR, a global investment firm. Upon completion of the transaction, Apollo Funds will combine Tony’s Fresh Market, a Chicago-based portfolio company, with Cardenas Markets, which operates across California, Nevada and Arizona, to create a Hispanic- and ethnic-focused grocer. Both companies will continue to operate under their respective brands and local leadership, while benefitting from greater scale, complementary capabilities and an expanded operating footprint.
Founded in 1981, Cardenas is a Hispanic grocery chain in the country with a differentiated store concept providing high-quality, specialty groceries at affordable prices. The company, led by CEO Doug Sanders, today operates 59 stores and sources products from more than 500 vendors. The combined Cardenas-Tony’s footprint will span nearly 80 stores across the western and mid-west United States with approximately $1.8 billion in combined revenues. Sanders will serve as CEO of the combined company and Cardenas chain, while Frank Ingraffia will continue to serve as the CEO of the Tony’s chain.
“Since joining Cardenas, we have made great progress in growing and enhancing our operations with KKR’s support, and I am thrilled by the opportunity for our team to now partner with Frank and the Tony’s team, leveraging our collective strengths. Together, as two of the highest quality Hispanic and ethnic grocers, we can deliver even greater value to the communities we serve,” Doug Sanders, CEO of Cardenas, said. “Apollo private equity has an extensive best-in-class track record of success in food retail, and I am thrilled to partner with Andy Jhawar and the Apollo team again in this exciting next chapter for Cardenas. I would also like to thank KKR, which has been a tremendous strategic partner over the past six years, helping us grow and professionalize the business.”
“Cardenas has grown significantly over the last several years under Doug’s leadership and we are excited to accelerate its growth in combination with Tony’s in this next phase,” Andrew Jhawar and Joanna Reiss, private equity partners at Apollo, said. “We are excited to once again partner with Doug following our highly successful investment in Sprouts Farmers Market which Doug led as CEO under Apollo funds’ ownership. Cardenas and Tony’s have robust positions in the ethnic grocer space, and together can leverage best practices across their complementary go-to-market strategies, merchandising, customer loyalty programs and more. 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.”
In 2016, KKR acquired Cardenas Markets from the Cardenas family with the thesis of transforming the business into a growth platform. Under KKR’s ownership, Cardenas doubled in size through a combination of organic growth and strategic acquisitions.
“We are immensely appreciative of everything Doug and the management team have done to build a great company dedicated to bringing fresh and affordable groceries to the communities that it serves, consistent with the values that the Cardenas family instilled in the business,” Vishal Patel, a Managing Director at KKR, said. “We are confident that Apollo and Tony’s Fresh Market are the right partners for Cardenas as it enters its next chapter of growth.”
The transaction is subject to customary closing conditions and is expected to be completed by Q3 2022. Financial terms of the transaction were not disclosed.
Paul, Weiss, Rifkind, Wharton & Garrison acted as legal counsel to the Apollo Funds. Solomon Partners acted as lead financial advisor to Cardenas Markets and KKR. BMO Capital Markets also advised, and Kirkland & Ellis served as legal advisor to Cardenas Markets and KKR. Credit Suisse, Wells Fargo and Rabobank have provided committed debt financing for the transaction.
