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Spartan to buy Nash Finch

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MINNEAPOLIS — Nash Finch, one of the nation’s largest grocery distributors and a fixture in the Twin Cities for nearly a century, said Monday that it is being acquired by an industry peer from Michigan.

Purchaser Spartan Stores said the $1.3 billion combination would help cut $50 million in annual costs. A spokesman for Nash Finch declined to say how many Twin Cities jobs would be affected, but the companies said some operations will stay in Minnesota.

Nash Finch has a distribution center outside Bellefontaine.

Started as a candy and tobacco store in North Dakota in 1885, what became Nash Finch moved its headquarters to Minneapolis in 1919 and grew into a Fortune 500 grocery store and warehouse empire that today employs more than 8,000 people.

But grocery distributors have come under intense pressure as the industry has consolidated under such giants as Sysco and US Foods, while big-box retailers such as Target and Wal-Mart have branched into the grocery business with their own distribution networks.

Ajay Jain, an analyst at Cantor Fitzgerald, wrote that, to some degree, the deal may be “an issue of strategic necessity, particularly in the case of Nash Finch, which has been having execution issues.”

The company, now based in Edina, posted a $93 million loss in 2012 and has limped through the first half of 2013. But while Spartan is the financially healthier of the two, Nash Finch offers greater geographic reach and a coveted military distribution business based in Norfolk, Va., that until recently had been growing.

The companies valued the all-stock deal at $1.3 billion, including existing debt at both firms.

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