Retail News Breaks
New, smaller Supervalu emerges after blockbuster deal
March 22nd, 2013
MINNEAPOLIS – Supervalu Inc. opened for business today as what it called "a more efficient wholesale and retail company" with the closing of a deal to sell five of its supermarket chains.
The company on Thursday wrapped up the sale of 877 Albertsons, Acme, Jewel-Osco, Shaw's and Star Market supermarkets and their Osco and Sav-on in-store pharmacies to AB Acquisition LLC, an affiliate of a Cerberus Capital Management LP-led investor consortium, in a stock deal valued at $3.3 billion, including $100 million in cash and $3.2 billion in debt assumption. AB Acquisition is the parent of Boise, Idaho-based supermarket chain Albertsons LLC.
Supervalu now comprises three business units: the Independent Business food wholesale operation, which serves nearly 2,000 stores nationwide; Save-A-Lot, a hard discount grocery chain, with more than 1,300 stores; and five regional supermarket chains including of Cub Foods (67 stores, including corporate and franchised), Farm Fresh (43 stores), Shoppers Food & Pharmacy (56 stores); Shop 'n Save (45 stores) and Hornbacher's (six stores).
"The successful completion of this transaction marks a significant milestone for Supervalu and our shareholders, customers and employees," president and chief executive officer Sam Duncan said in a statement. "As we move forward, Supervalu will continue as one of the largest wholesale grocery providers in America serving nearly 2,000 independent retailers in 43 states; we plan to continue growing our hard discount Save-A-Lot format that includes over 1,300 stores nationwide; and we will operate five, strong regional retail banners. I am pleased to be leading Supervalu during this time of change and strongly believe there is an exciting future ahead for us."
With the finalization of the agreement, Supervalu emerges as a much smaller company, with total sales of around $17 billion, compared with $36 billion before, and about 1,500 stores in its retail store base, compared with more than 2,400 previously.
Supervalu also has divested the majority of its 797 in-store pharmacies. As of the close of its 2012 fiscal year last February, Supervalu was the 11th-largest North American retail pharmacy operator by dollar volume, with pharmacy sales of $2.35 billion, and the 12th-largest by pharmacy count, with 798 in-store pharmacies.
As part of the transaction, Supervalu also announced that Symphony Investors, a Cerberus-led investor consortium, completed a tender offer resulting in the acquisition of about 11.69 million shares, or nearly 5.5% of Supervalu's outstanding common stock. In addition, the company issued almost 42.48 million new shares of common stock, or about 19.9% of the outstanding shares, to Symphony Investors. Supervalu noted that the tender offer and primary stock issuance make Symphony its largest shareholder, with 21.2% of total outstanding common shares.
Supervalu also confirmed that it has closed a $1 billion asset-based revolving credit facility and a $1.5 billion term loan secured by a portion of the company's real estate, equipment and an equity pledge of Moran Foods LLC, the parent entity of the Save-A-Lot business.
With the close of the Supervalu transaction, Robert Miller, president and CEO of Albertsons LLC, becomes Supervalu's new nonexecutive chairman, replacing Wayne Sales, who served as executive chairman since August. Sales will remain on the board as a director.
On Friday, Duncan announced several appointments to Supervalu's executive team. Janel Haugarth will remain with the company as executive vice president and president of the independent business and supply chain services, while Randy Burdick has been named executive vice president and chief information officer, replacing Kathy Persian, who is leaving the company.
In addition, Michele Murphy has been appointed executive vice president of human resources and corporate communications. She replaces Dave Pylipow, who is slated to leave the company at the end of April. Supervalu also said that Andy Herring, executive vice president of real estate, market development and legal, is leaving the company.
More Retail News Breaks >>