Spartan Stores and NashFinch – Merger Case Study of Bidder Size Smaller Than the Target Size

Abstract

Spartan Stores a publicly traded company in the grocery industry made a bid to acquire Nash-Finch Company in 2013. Nash Finch shareholders received 1.2 shares of Spartan stores and the transaction was valued at $340 million. The merger was unusual that the target firm Nash Finch was larger than the bidding firm Spartan stores. Its 2012 revenue was almost double Spartan Stores and its shares traded for more on the NASDAQ. It was losing market share in its retail stores and their wholesale customers were experiencing competitive pressure. The case study is written for students in advanced managerial finance course. Students are asked to understand the motives of the merger, method of payment and its signaling content, valuation of the two firms prior to the takeover offer, and learn about the post-merger performance.