No Investors for Fresh Market

JON SPRINGER

GREENSBORO, N.C. — Declaring “We fell in love with the company all over again,” the family controlling The Fresh Market here has pulled the gourmet retailer off the sales block.

The Fresh Market this spring had engaged Goldman Sachs to pursue new investment, including a potential sale, to help ramp up expansion. Sources told SN last week, however, that the process resulted in offers that were somewhat less than the family had hoped to garner. Tight credit markets making deal financing more expensive, along with an economy-related sales slowdown at The Fresh Market, may also have tempered enthusiasm, observers said.

“It's a profitable, healthy company, and it has done real well,” one source with knowledge of the proceedings, who asked not to be identified, told SN. “But they wanted a healthy price, and bids came in that were less than they were looking for.”

In a statement last week, Brett Berry, president and chief executive officer of The Fresh Market, and the son of founder Ray Berry, said the company had received “thoughtful and fair offers from a number of different companies,” but decided to maintain full control of the enterprise.

“Simply put, as we went through the process of courting potential buyers and investors, we fell in love with the company all over again,” the statement added. “We consider ourselves fortunate to continue to own and operate the company founded by our family over 25 years ago.”

Officials at the retailer were not available last week for further comment.

Fresh Market was seeking bids of about $800 million, or more than 10 times EBITDA, the source told SN. Published reports had identified private-equity firms Apollo Capital Management and Oak Hill Capital Partners as participants in the bidding.

However, the deteriorating economy appeared to diminish interest among investors, and the owners ultimately decided to pull the company off the market.

“They are still doing well, but comps were down over the last six months,” the source said. “This environment is tough for all stocks, but I think bidders were a little scared by slowing comps.”

Fresh Market said it “plans to sustain its aggressive growth plan in addition to expanding its reach into new markets.” Although those goals may have been more easily achieved with a new investment, the company still generates sufficient cash to develop new stores, sources said. It may seek more investment when the economy improves, but marketing the company “is a disruptive process,” the source said. “What they said in the press release could be true — they fell in love with the company and want to operate it themselves.”

The Fresh Market was founded in 1982 by Ray Berry, a former executive with 7-Eleven. The stores carry an array of fresh and prepared foods in a 20,000-square-foot store targeting upscale shoppers. It has grown into an 80-store chain in 17 states.