Supervalu Inc selling five grocery chains to investor group
Supervalu Inc struck a $3.3 billion deal to reduce its burdensome debt by selling five retail grocery chains to an investor group led by Cerberus Capital Management LP, the No. 3 US grocery store operator announced on Thursday.
Shares in Supervalu jumped 7.9 percent to $3.29 on the New York Stock Exchange. The company has been losing shoppers to rivals like Kroger Co and Wal-Mart Stores Inc.
Supervalu, which also reported a quarterly profit, said it would sell the Albertsons, Acme, Jewel-Osco, Shaw's and Star Market chains and in-store pharmacy under the Osco and Sav-on names. The transaction will be valued at $3.3 billion, in which the buyer will take on $3.2 billion of Supervalu's debt.
After the deal, slated to close by the end of March, Supervalu's business will include a food wholesaler serving 1,950 US stores; the discount grocery chain Save-A-Lot, which offers a smaller assortment of low-priced merchandise than a typical supermarkets; and the regional grocery chains Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's.
As part of the deal, a Cerberus-led group will launch a tender offer for up to 30 percent of Supervalu's common stock at $4 per share, which represents a 50 percent premium to the 30-day average closing share price.
The Cerberus investor group includes real estate firms Kimco Realty Corp, Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group.
Supervalu Chief Executive Wayne Sales said the company's remaining supermarket chains hold strong competitive positions and are not in need of significant investment.
The transaction will also leave
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