NEW YORK (AP) — Supervalu Inc. is selling off five of its grocery chains,
including Albertson’s and Jewel-Osco, after years of being squeezed by
The nation’s No.
3 traditional supermarket operator said Thursday that the sale of 877 stores
to an investor group led by Cerberus Capital Management will also include
Acme, Shaw’s and Star Market. The group already owns about 200 Albertson’s
in the South and Southwest.
sale, Supervalu will focus on its Save-A-Lot discount stores, as well as its
smaller regional chains Cub, Farm Fresh, Shoppers, Shop ‘n Save and
Hornbacher’s. It will also keep its wholesale business that distributes
groceries to stores.
group will pay $100 million in cash for the stores, and the new company will
assume $3.2 billion in existing debt. Cerberus will also offer to buy up to
30 percent of the remaining Supervalu for $4 per share after the deal
struggled for years to turn around its business. The broader supermarket
industry has been facing growing competition from big-box retailers such as
Target, drugstore chains and dollar stores. While bigger chains such as
Kroger Co. have adapted by tweaking store formats and improving discount
programs and product offerings, Supervalu has scrambled to keep pace.
Supervalu fired its CEO and tapped Chairman Wayne Sales to lead a
turnaround. The company said at the time that it was reviewing its options,
such as putting itself up for sale. In the meantime, it has closed stores
and cut jobs as part of an effort to reduce costs. Those efforts to fix its
business will continue after the sale of its grocery chains is complete, the
company said. Sam Duncan, who most recently was CEO of OfficeMax, will
replace Sales as head of Supervalu after the deal closes.
Supervalu also reported a profit of $16 million, or 8 cents per share, for
the third quarter. The results were boosted by a gain related to a
settlement with credit card companies. A year ago, the company lost $750
million, or $3.54 per share.
revenue for the period declined 5 percent to $7.9 billion. Sales at
locations open at least a year fell 4.5 percent, and 4.1 percent at
Save-A-Lot. Its profit margins also fell, in part because the company said
it boosted promotions and cut prices for shoppers.
Bob Miller, who
heads the Albertson’s already owned by the Cerberus-led investment group,
said the performance at the newly acquired Albertson’s could be improved.
“In 2006, we
acquired a set of stores that lacked investment and were in tough shape,” he
said, noting that those stores have grown into a “solid regional supermarket
chain with growing sales.”
for the buyers noted that the transaction is still subject to approvals and
declined to say whether any job cuts were planned for the newly acquired
Albertson’s, or whether the other chains would keep their names.
shares rose 15 percent to $3.51 in morning trading.