Apollo agrees $975m grocery exit to Ares

Ares Management reportedly beat rival Centerbridge Partners to acquire food retailer Smart & Final, which Apollo purchased in 2007.

Apollo Global Management has agreed to sell its majority stake in grocery retailer Smart & Final to Ares Management for $975 million.

Smart & Final operates 235 stores in the US states and 13 stores in Mexico.  Apollo invested $262 million in the business in 2007, according to an S-1 filing, in a transaction valued at about $813 million. The firm acquired Smart & Final using capital from its $11.4 billion sixth fund, a 2005 vintage.

Ares reportedly beat out peer Centerbridge Partners for the company, which Apollo put up for sale over the summer.
Morgan Stanley, Bank of America Merrill Lynch, Credit Suisse mad Deutsche Bank provided debt financing in the transaction.

The deal marks Ares’ second disclosed acquisition of 2012, after an investment in Mexican oilfield services provider Oro Negro, according to the firm’s website.

Smart & Final is similar in both size and business model to existing Ares portfolio company 99 Cents Only Stores, a discount retailer the firm acquired alongside the Canada Pension Plan Investment Board for $1.6 billion last October, beating out an offer from Leonard Green & Company that had valued the company at $1.3 billion.

Apollo and Ares both declined to comment.

Ares is currently investing its fourth corporate opportunities fund that closed on its $4.7 billion hard-cap in August. The firm is also in fundraising for its second European mezzanine fund targeting €1.5 billion.