Bloomberg News

Supervalu Said Moving Toward Sale of Two Chains to Cerberus

December 05, 2012

Supervalu Said Moving Toward Sale of Two Chains to Cerberus

The Supervalu Inc. logo is displayed at a distribution center in Hopkins, Minnesota. Photographer: Ariana Lindquist/Bloomberg

Supervalu Inc. (SVU:US) is moving toward a deal to sell retail chains such as Albertsons and Save-A-Lot to Cerberus Capital Management LP after talks on a full takeover of the grocer stalled, said people with knowledge of the matter.

Save-A-Lot has also received interest from parties such as private-equity firm KKR & Co. (KKR:US), said one of the people, who asked not to be named because the process is private. Discussions on a Cerberus bid for the entire company stumbled as lenders balked at the financing terms, they said. Supervalu’s shares rose.

Now Cerberus may seek control of Albertsons and Save-a-Lot, the grocer’s two largest chains, and take an equity stake in what remains of Supervalu, said two people. Selling the chains would give Supervalu the cash to pay down some of its more than $6 billion in debt (SVU:US) and allow the company to focus on selling or restructuring its nine other chains, they said.

Cerberus aims to finalize a deal by the end of the year, one of the people said. The firm could still pursue a takeover of all of Supervalu, or no deal could be done.

Supervalu rose (SVU:US) 14 percent to $2.90 at the close in New York, the biggest gain since Oct. 22. The shares have lost 64 percent this year.

Mike Siemienas, a spokesman for Eden Prairie, Minnesota- based Supervalu, declined to comment on any negotiations, as did Kristi Huller, a spokeswoman for New York-based private-equity firm KKR. John Dillard, a spokesman for Cerberus at Weber Shandwick, also declined to comment.

Sales Drop

Sales at Supervalu have fallen for three straight years and are projected to drop 4.4 percent to $34.5 billion in the company’s fiscal 2013, according to data compiled by Bloomberg. The grocer, which also owns the Jewel-Osco brand, has recently lowered prices at some of its chains to attract customers and compete with big-box retailers including Wal-Mart Stores Inc. (WMT:US) and Target Corp. (TGT:US)

The Save-A-Lot chain is Supervalu’s largest, with more than 1,280 stores across the country, according to the company’s website. Albertsons is the second-largest chain within Supervalu with more than 450 stores in the Northwest, southern California and Nevada.

In July, Supervalu said it was working with Goldman Sachs Group Inc. and Greenhill & Co. to examine options. During the sale process, the company attracted interest in parts of its business from billionaire Ronald Burkle, as well as private- equity firms KKR and TPG Capital, people with knowledge of the matter have said.

To contact the reporters on this story: David Welch in New York at dwelch12@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net


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Companies Mentioned

  • SVU
    (SUPERVALU Inc)
    • $9.33 USD
    • 0.21
    • 2.25%
  • KKR
    (KKR & Co LP)
    • $24.78 USD
    • -0.16
    • -0.65%
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