Nash Finch Co. and Spartan Stores Inc. agreed to an all-stock business agreement which is estimated to be worth US $1.3 billion.

According to the agreement, stockholders of Nash Finch will get 1.2 shares in Spartan Stores for each common stock that they own. Once the deal is completed, Spartan Stores will own 57.7% of the combined assets of the companies. Investors of Nash Finch, meanwhile, will retain 42.3%.

Dennis Edison, Spartan Stores CEO, said the venture will hopefully form one of the premier grocery wholesaler and retail operators in the US.

The agreement, he said, is seen to create "a comprehensive portfolio of high-quality private brands, nationwide distribution services and a strong platform for future growth."

Both companies have combined yearly sales of around US $7.5 billion. They are present in 37 states through 177 retail outlets. A statement said that the revenues for the combined company will improve in the first year of operation as well as result to US $50 million in savings by the third year.