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Specialty foods distributor United Natural Foods, Inc. (UNFI - Analyst Report) has signed a definitive agreement to acquire to acquire all the equity interests of Trudeau Foods, a Minnesota-based distributor of natural, organic and specialty food products. Though the transaction details were not disclosed, the deal is expected to close on Sep 30, 2013. Post-acquisition, Trudeau Foods will become a wholly-owned subsidiary of United Natural.

Trudeau Foods is owned by Trudeau Holdings, LLC, a portfolio company of Arbor Investments. The deal is a strategic fit for United Natural, which is looking to enhance its position and increase its market share in the specialty products industry. Following the deal, United Natural will have the opportunity to expand its products in the markets of Minnesota, North Dakota, Wisconsin and Michigan’s Upper Peninsula, where Trudeau Foods has a presence.

Trudeau Foods distributes a full range of fine-quality and specialty gourmet meats, frozen foods, dairy, bakery, deli, seafood and dry grocery items, which will strengthen the company’s product portfolio in the market. On the other hand, Trudeau Foods will have the benefit to expand its product portfolio using the company’s strong distribution network.

United Natural has taken the inorganic route to grow its distribution network, customer base and boost long-term growth. During the first quarter of fiscal 2013, the company completed three business combinations within its wholesale segment. Earlier in Jun 2010, the acquisition of certain Canadian food distribution assets of SunOpta Inc. made the company the largest distributor of natural, organic and specialty foods, including kosher foods, in Canada.

With the increasing demand for a healthy lifestyle, food safety and environmental sustainability, the demand for organic products is growing rapidly. Moreover, it is believed that the growth rate of the natural products industry has outpaced the growth of the overall food-at-home industry.

The increased demand for organic products is also reflected in higher sales of the company’s fourth quarter of fiscal 2013 results. United Natural’s earnings and sales surged a respective 27.5% and 22.2% year over year on the back of continuous increase in demand for the company’s organic and natural food products.

United Natural currently holds a Zacks Rank #3 (Buy). Other stocks in the food industry worth considering are Green Mountain Coffee Roasters, Inc (GMCR - Analyst Report), Boulder Brands Inc. (BDBD - Snapshot Report) and Pinnacle Foods Inc (PF - Snapshot Report). While Green Mountain and Pinnacle Foods hold a Zacks Rank #1 (Strong Buy), Boulder Brands holds a Zacks Rank #2 (Buy).

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