Mark Sanchez: Big news, not only for that wholesale and retail grocery industry, but big news here in Grand Rapids. Another homegrown company, that’s SpartanNash, of course, formerly Spartan Stores for a deal many years ago. And it became SpartanNash Company. It's now being sold a $1.77 billion sale to privately held C&S Wholesale Grocers. It's based in New Hampshire on the East Coast and this kind of came out of nowhere here the other day, this week, as SpartanNash is going through a merger and being sold. And this company dates back to 1917 in Grand Rapids, and it ended the first quarter with some debt. So, part of this deal came about because SpartanNash had had some growing debt and lower earnings. You know, it ended the first quarter with about $762 million in long-term debt. That eclipsed shareholder equity of about $738 billion. So, the earnings have not been going up. They peaked in 2021 at $73.8 million for the full year. Last year it was just a little bit below $300,000 for the whole year. So, you take all those together and you get a picture of a company that may be a merger, maybe an acquisition by another company, was the route to go for the future. So, this deal is going through the process. Again, it's $1.77 billion and we'll learn more about it in the coming weeks as it goes up to a vote. Obviously, the shareholders have to approve it there. But looking at some of the regulatory filings, you know, it was interesting seeing the story of how it came together. The company was not proactively seeking a sale and received a proposal from C&S. So, any public company, when you get a proposal, you get somebody calling saying, hey, we'd like to buy you, we'd like to do something. You have a fiduciary duty as a director to take a look at it and see if this is in the best interest of your shareholders.
Patrick Center: What do we know about C&S Wholesale Grocers?
Mark Sanchez: Well, it's a pretty big outfit. It's one of the largest companies in the U.S. It's been around quite a while. It supplies a lot of stores across the country. Again, it's based in New Hampshire. It offered $26.90 per share for SpartanNash stock, which had closed last week at $17.64. When this deal was announced Monday, boy, the share price just shot right up. Obviously, the investors liked it. As far as C&S, it was ranked as the eighth largest privately held company in the U.S. in 2024. That's according to Forbes Magazine. It had about $34 billion in sales. So, it's a big outfit. It supplies a lot of grocery stores, about 10,000 independent retailers around the country. This is going to create a very large grocery, wholesale, retailer in the country.
Patrick Center: Any indication of how SpartanNash fills a need, or does it fit right in with the mission of C&S?
Mark Sanchez: That's something still to come and we'll see how they go about through this process as they again go up to regulatory review. It goes through due diligence for the shareholders. We'll have to see how all that pans out and what's this going to mean for the corporate headquarters in Grand Rapids, for the jobs in Grand Rapids, which is all regular, normal fallout. Anytime you see a merger or an acquisition.
Patrick Center: We're talking with Crain’s Grand Rapids Business staff writer, Mark Sanchez. It’s been established over the decades that Kent County has a housing shortage, but there's a new study out that gives us a pretty good sense of where we are and where we're heading.
Mark Sanchez: And it's a little bit of progress. This is a study that's just out. It's the 2025 Kent County Housing Needs Assessment from Housing Next, which is an advocacy group in Kent and Ottawa counties. And what it shows is, you know, the housing shortfall for Kent County decreased slightly over the last three years. You know, we've seen more housing construction, but it's still far behind the pace of demand. Bottom line, there's a need. A projected shortfall of 2.3%. And that's down from a few years ago. So, the shortfall is now identified as about 33,900 units. That's down from 34,700 a few years ago. So again, a little bit of progress as the housing builders, the developers are now beginning to really ramp up more construction. And estimates of the county's rental housing shortage are similar, thanks to a significant multi-family number of projects that have been coming online. Bottom line, there is some progress, yet there's still a housing shortage. And one of the consultants for Housing Next said the 6,000 new housing units added between 2022 and 2024, it's a start, but certainly there's much more needed and faster. So bottom line, if you're looking to build a new home, looking for a home in Kent County, there's still a tight supply as a product on the market.
Patrick Center: So, I know there's been some state involvement. Are there solutions that we're seeing come to fruition in some of the public-private partnerships?
Mark Sanchez: Sure. You know, when you talk about the housing shortage, part of this is, you know, we need more talent, talent, talent, talent is the mantra you hear so much. We need to attract more. Well, so you attract them, but where are they going to live? So, what we've seen is bipartisan efforts on the state level to help remove and reduce some of the red tape and boost housing production in the state. There's a package of bills that have been in the legislature that some legislators are hoping to revive in the present session. Basically, to allow duplexes by right, reform setback, and lot size and unit size requirements and parking requirements. What you're talking about is creating greater density within a project. Part of the issue here is cost and housing affordability. If you can find a way to kind of adjust some of these regulations and rules, maybe bring that cost down, but also allow more housing units to go up and address this issue.
Patrick Center: The Michigan Economic Development Corporation held its board meeting Tuesday, and it is offering some additional dollars to the New Community Transformation Fund.
Mark Sanchez: Yeah, this is the venture, the investment fund formed five, six years ago here in Grand Rapids, by Birgit Klohs and Scott Welch. It focuses on investing in companies owned by People of Color, historically disadvantaged communities. There's a really lack of venture capital that flows each year in this country to minority-owned businesses. So, they started that fund and now they're looking to start a second fund. The Michigan Strategic Fund Board on Tuesday morning agreed to invest up to $9.8 million into New Community Transformation Fund 2 as a limited partner, and it would be up to a $20 million fund. The $9.8 from the state and the MEDC is contingent on New Community Transformation Fund raising $10.2 million in private capital. To receive that full commitment, it needs to achieve that goal. It's a second fund for the New Community Transformation Fund, and it'll operate the same way as fund one, which will focus on investing in companies owned by People of Color that are based here or they're based elsewhere. And then to receive that capital, they will have to relocate here to Grand Rapids and West Michigan.
Patrick Center: And fund one, do we have some success stories?
Mark Sanchez: You know, venture capital, it's a long-term investment. You know, these companies are receiving this capital at a pretty early stage. In this case, maybe a little bit further down that continuum to where they have some maturity in them. So yeah, those last check, those companies are still operating. You've seen some companies that have received that capital. They've gone on to leverage it to kind of obtain additional private capital and they're still going forward. It's a time we'll tell once we see an exit and they generate that return.
Patrick Center: There have been some changes to the New Community Transformation Fund administration in the last six months. How is that impacting the organization?
Mark Sanchez: It brings some new management. This was a deal that the New Community Transformation Fund signed last December, late last year with Michigan Capital Network. That's an investment firm here in Grand Rapids that runs four venture capital funds and five angel investing groups in the state. And signed an affiliation agreement with New Community Transformation Fund after its previous managing director Ollie Howie left for a new opportunity. So, this really brought some new management into the fund and kind of makes a lot of sense for both. For Michigan Capital, it kind of expands their horizons into a new area and helps with deal flow. And then for a New Community Transformation Fund, it aligns itself with a pretty successful organization that's also got a nice network out there to source deals.
Patrick Center: Crain's Grand Rapids Business staff writer, Mark Sanchez, thank you so much.
Mark Sanchez: Thank you, Patrick.