An investor group led by Cerberus Capital Management LP is nearing a deal to acquire some of grocery chain Supervalu Inc. (SVU:US)’s assets and become a shareholder in the remaining public company, said three people familiar with the matter.
Cerberus and its real estate partners are willing to put in $500 million in equity to appease lenders that had previously balked on terms Cerberus was seeking, said two of the people, who asked not to be identified because the talks are private. Last month, Supervalu had been moving toward a deal to sell only individual chains such as Albertsons and Save-A-Lot to Cerberus after discussions on a full takeover stalled, people with knowledge of the matter said then.
The Cerberus-led group and Supervalu have agreed to a framework that includes buying some of the company’s chains. In addition, the investor group would then invest in the remaining company and become a major shareholder, according to the people. The parties are seeking to announce an agreement on Jan. 10, according to one person. A deal has yet to be finalized and could still fall apart.
Supervalu’s shares jumped 20 percent to $3.10 as of 2:43 p.m. New York time.
Mike Siemienas, a spokesman for Eden Prairie, Minnesota- based Supervalu, declined to comment, as did Peter Duda, a spokesman for Cerberus.
Cerberus already owns some Albertsons stores. In 2006, the New York-based private-equity firm had led an investment group that bought more than 600 Albertsons -- including in Dallas, Florida and Northern California -- as part of Supervalu’s acquisition of the chain, a deal valued at $17.4 billion at the time.
Dow Jones reported earlier that Cerberus was close to a deal on Supervalu.
Sales at Supervalu have fallen for three straight years and are projected to drop 4.5 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.
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