Supervalu moving toward selling its two largest chains

Mike Hughlett
Star Tribune
December 05, 2012

Supervalu is moving toward selling its two largest chains to Cerberus Capital Management after a deal for the entire company has stalled, Bloomberg News is reporting.

Eden Prairie-based Supervalu, which owns Cub Foods, is considering selling its Albertsons and Save-A-Lot chains to Cerberus, Bloomberg said, citing unnamed sources.

Supervalu declined to comment, except to say that it "continues in active (sales) discussion with several parties."

Supervalu was at $2.76 in the late-morning trading, up 21 cents or 8.2 percent.

For Supervalu, Albertsons' is big in the western part of the United States. Supervalu and Cerberus teamed up in 2006 in the $17.4 billion purchase of Albertsons, a multi-chain company that included the flagship Albertson's brand.

For $12.4 billion, Supervalu got 1,124 traditional grocery stores under several banners across the U.S., including 569 Albertsons. Cerberus got 655 of Albertsons underperforming stores, of which it subsequently sold off more than 400.

St. Louis-based Save-A-Lot is a hard-discount supermarket specializing in private labels and akin to Aldi, another low-price chain. It has 1,200 outlets nationwide, though only two in Minnesota. Save-A-Lot is considered one of Supervalu's most valuable assets.

Bloomberg reported that buyout group KKR & Co. and others have also expressed interest in Save-A-Lot.

Supervalu put itself up for sale as a whole or in parts in July after several quarters of falling sales and market share, along with a rapidly declining stock. Stock analysts have expected that the grocery giant, which has 11 chains, would be sold in pieces.

But in October, speculation began to center on a bid for the whole company by Cerberus, a large private equity group. It now appears that financing for a whole sale of Supervalu to Cerberus is on the rocks, according to reports citing unnamed sources.

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