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November 30, 2012 3:23 pm

Sprouts Farmers Markets to go public in 1H13

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This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com
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Sprouts Farmers Markets will look to go public in the first half of next year, a source familiar with the situation and an industry banker told mergermarket.

The Phoenix, Arizona-based food retailer is likely to file an S-1 in the first quarter of next year, the source said. Sprouts hasn’t appointed underwriters yet, according to the source and the banker. Apollo became a majority owner of Sprouts Farmers Market in February 2011 after Smart & Final, another Apollo portfolio company, sold Henry’s Marketplace to Sprouts for an undisclosed sum.

Executives at Sprouts did not respond to requests for comment. A spokesperson for Apollo declined to comment.

Sprouts isn’t likely to explore a sale before going public because the valuations are so high for natural and organic grocers that buyers would not be able to compete on price, said the source familiar.

Whole Foods trades at 15.2x and The Fresh Market at 18x to 20x 12-month-trailing EBITDA, according to an equity analyst.

Sprouts merged with Sunflower Farmers Market earlier this year. The two had a total of 139 stores and projected annual revenues this year of USD 2bn, according to a press release.

Sprouts’ valuation in the public markets is likely to be higher than any other listed supermarket chain, said the industry banker. Sprouts was listed as the fastest-growing retailer in the country in 2011, with revenues up by 71.9%, by Statista Industry Statistics.

The 2011 merger of Sprouts and Henry’s reunited retailers which were both founded by members of the Boney family. Shon Boney, the grandson of Henry Boney, who started in food retail in San Diego in 1943, remains chairman of Sprouts today.

This news service reported in April 2011 that Sprouts had reached out to its debt holders about going public.

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