Supervalu to Sell 5 Banners to Cerberus

MINNEAPOLIS — Supervalu [4] here said Thursday that it has reached an agreement to sell its Albertsons, Jewel-Osco, Acme, and Shaw’s and Star Market banners to a group led by Cerberus Capital Management in a transaction valued at $3.3 billion.

Supervalu would remain a publicly traded company operating its wholesale distribution business, the Save-A-Lot limited-assortment banner and several regional chains — Cub, Farm Fresh, Shoppers, Shop ’n Save and Hornbacher’s — essentially the businesses it had before its 2006 acquisition of Albertsons. The “new” Supervalu, which would also receive an investment from Cerberus, would have projected annual sales of $17 billion.

The sale of Supervalu’s primary retail banners, which includes 877 stores, would reunite Supervalu’s Albertsons stores with the Albertsons stores operated by Albertsons LLC [5], which is owned by Cerberus. That sale is projected to close by the end of the first calendar quarter.

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When the transaction is completed, Robert Miller, the current president and chief executive officer of Albertsons LLC, will be non-executive chairman of Supervalu. Sam Duncan, 61, a longtime retail executive who most recently was chairman, president and CEO of OfficeMax, was named president and CEO of Supervalu, succeeding Wayne Sales. Before joining OfficeMax in 2005, Duncan was president and CEO of ShopKo Stores from 2002-2005, and before that he had been president of Kroger Co. [7]’s Ralphs and Fred Meyer divisions.

Cerberus’s partners in the acquistion include Kimco Realty Corp., Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group. The investment will include $100 million in cash and $3.2 billion in debt.

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In addition, the investment consortium will conduct a tender offer for up to 30% of Supervalu’s common stock for $4 per share in cash.

“We are pleased to be making this investment and look forward to helping build long-term value for all stakeholders,” said Lenard Tessler, co-head of Global Private Equity and senior managing director at Cerberus. “We believe these transactions will create stronger, more competitive businesses.”

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