Smart & Final Inc., which operates food warehouse stores, agreed Tuesday to a takeover by private equity firm Apollo Management LP for about $700 million.


Under the deal, the New York-based firm will buy Smart & Final for $22 per share in cash, representing a 15 percent premium to Friday's closing price of $19.06.


Including debt, the deal is worth $812.9 million, the company said. Smart & Final shares jumped 13.4 percent ($2.56), to $21.62 in afternoon trading on the New York Stock Exchange -- having hit a new 52-week high of $21.85 earlier in the session.


Apollo also entered into a $22-per-share stock purchase agreement with Paris-based Casino Guichard-Perrachon SA, which owns about 52 percent of Smart & Final's stock.


Smart & Final's board approved the deal, which is expected to close in the second quarter, pending shareholder clearance.


News of the sale enabled investors to shake off concerns over Smart & Final's fourth quarter earnings report, which were released Tuesday as well and showed a 45 percent drop in net income because of higher costs that offset sales increases.


Fourth quarter net income fell to $5.1 million (16 cents per share), a 45.2 percent fall from $9.3 million (29 cents) for the same period a year earlier. Analysts polled by Thomson Financial were expecting earnings of 18 cents per share.


The company said its results included costs of 1 cent per share, which came from the company seeking strategic alternatives.


Sales for the Los Angeles warehouse retailer rose 8 percent to $491.4 million thanks mainly to increased sales efforts, the company said.


For the year, net income fell 3 percent to $20.8 million, or 65 cents per share, from $21.4 million, or 66 cents per share in 2005. Revenue rose 5 percent to $2.1 billion from $2 billion in the prior year.

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