Fresh Market Purchase by Apollo Global Challenged in Lawsuit

  • Deal unfairly favors buyer, shareholder alleges in complaint
  • Apollo agreed to pay $1.36 billion for specialty grocer

A Fresh Market Inc. investor sued to block the grocer’s $1.36 billion acquisition by Apollo Global Management LLC, claiming the deal unfairly favors the buyer.

Apollo, a private equity firm based in New York, said March 14 that it would pay $28.50 in cash for each Fresh Market share and then take the company private.

The proposed deal is the product of a flawed process that was “designed to ensure the merger of Fresh Market with Apollo on terms preferential to Apollo and defendants,” the investor, John Solak, said in an April 8 complaint in federal court in Wilmington, Delaware, asking that the transaction be barred as it stands. He is seeking to represent all Fresh Market shareholders.

The deal marks a return to the grocery business for Apollo, which previously owned Sprouts Farmers Market Inc. and Smart & Final Stores Inc. Reports surfaced in October that Fresh Market, based in Greensboro, North Carolina, had turned to New York-based Apollo for help exploring a buyout, and Kroger Co. was also mentioned as a potential suitor.

Ray Berry, who founded Fresh Market in 1982, and his son, Brett Berry, won’t tender their shares and will roll over the “vast majority” of their stakes in the transaction with Apollo. They collectively own about 9.8 percent of the stock.

Spokesmen for Apollo and Fresh Market didn’t immediately respond to requests for comments on the lawsuit.

The case is Solak v. The Fresh Market Inc., 16-0249, U.S. District Court, District of Delaware (Wilmington).

Related tickers:
APO US (Apollo Global Management LLC)
TFM US (The Fresh Market Inc.)

Before it's here, it's on the Bloomberg Terminal.