Supervalu Shares Rise on Cerberus Deal

MINNEAPOLIS — Shares of Supervalu [4] rose about 15% Thursday on the news that it was selling about half of its business.

As previosuly reported, the company is selling its Albertsons, Jewel-Osco, Acme and Shaw’s/Star Market banners to an investment group led by Cerberus Capital Management for about $3.3 billion. Cerberus is also planning to issue a $4 tender offer for Supervalu shares, taking up to a 30% stake in the company. The shares closed Thursday at $3.47.

After the sale, Supervalu will retain its wholesale arm, which will account for 47% of its volume going forward; its regional supermarket banners, which will account for 28%; and the Save-A-Lot company-owned and licensed stores, which will generate the remaining 25%. Total volume after the sale is projected to be about $17 billion, vs. the $36 billion the company reported last year.

Read more: Supervalu to Sell 5 Banners to Cerberus [5]

Supervalu also reported that its sales continued to deteriorate in the recently ended third quarter. Sales for the period were down 5%, to $7.9 billion, as identical-store sales in supermarkets fell 4.5%. That included a 2.8% decline in customer counts and a 1.7% reduction in average basket size.

Overall net income was $16 million, which included a one-time gain of $26 million from a credit card lawsuit settlement and a $15 million charge for previously announced store closures. That compares with the $750 million loss recorded in the year-ago quarter following $800 million in goodwill write-downs.

At Save-A-Lot, ID sales fell 4.1% in the third quarter, fueled by weakness at corporate stores and by soft employment in Florida, the company said. Sherry M. Smith, executive vice president and chief financial officer, told analysts in a conference call that Save-A-Lot has implemented a new price program in one test market and “has seen results in the double-digit IDs consistently over the last few months.”

Wholesale sales were $1.99 billion in the quarter, even with the year-ago period.

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