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Activists unpack SpartanNash

Richard Collings
Mar 24, 2022
Illustration: Shoshana Gordon/Axios

Activist investors Macellum Capital Management and Ancora Holdings Group will file a definitive proxy statement to shake up grocery chain SpartanNash's (Nasdaq: SPTN) board.

Why it's the BFD: Although it hasn't caught the attention of Macellum's fight with Kohl's, SpartanNash's $8.9 billion in net sales and enterprise value of $1.65 billion make it a juicy target.

  • The firms' involvement has lifted SpartanNash's share price from nearly $31 to $34.69 as of yesterday's close. Levels not seen in about five years.

Details: Last Friday the activists issued a letter to shareholders noting that it is nominating three directors to the grocer's board in the coming weeks.

  • The letter said they beneficially own 4.5% of the company's outstanding common shares.
  • Macellum and Ancora, however, said they would rather reach a resolution than square off in a contested vote.

Between the lines: The activists pointed out SpartanNash has $1 billion in real estate that could be monetized.

  • In addition to grocery stores, it also operates a wholesale distribution division and a military food distribution business.
  • The military division produces sales of nearly $1.9 billion, while the retail division generates sales close to $2.6 billion. The distribution business has almost $4.5 billion in sales.

Yes, and: Options for SpartanNash include developing a three-year plan for increasing shareholder value and then weighing that against strategic alternatives, Macellum's founder Jonathan Duskin tells Richard.

  • Those alternatives include, in addition to monetizing the real estate, seeking a sale of the whole company or selling off certain divisions.
  • United Natural Foods, which also runs a military food division, might be a potential buyer of SpartanNash's military business, Duskin suggested.

The other side: SpartanNash slapped back, noting that shareholder return since the summer of 2019 has been 251%.

  • It also pointed out that the ratio of net debt to adjusted EBITDA has improved to 1.8x from 3.7x since the end of 2019.
  • The grocer hired Bank of America and law firm Sidley Austin to assist in its defense.

By the numbers: SpartanNash has a manageable debt load of $406 million, cash and cash equivalents of nearly $11 million, and adjusted EBITDA of nearly $214 million.

  • EV as a multiple of EBITDA is about 7.7x.
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