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A Fresh Start at Supervalu

MINNEAPOLIS — For Supervalu, it should become clear by the fall whether the new management team is getting the company moving in a more positive direction, industry observers told SN.

“The new management has no baggage,” Neil Stern, senior partner at McMillanDoolittle, Chicago, said, “which gives it the ability to make a fresh start with a new focus.

“Going forward, Supervalu should be a healthier business. Within a quarter or two, after it’s transitioned away from all the elements of the businesses it has sold and begun to focus on the remaining operations, we should see more stability fairly quickly.”

Supervalu’s new start follows the sale on March 21 of its five largest retail banners to AB Acquisition LLC — an investment group led by Cerberus Capital Management, New York, and Albertsons LLC, Boise, Idaho, along with four real estate companies: Kimco Realty Corp., New Hyde Park, N.Y.; Klaff Realty LP, Chicago; Lubert-Adler Partners, Philadelphia; and Schottenstein Real Estate Group, Columbus, Ohio.


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AB Acquisition paid $3.3 billion — $100 million cash and $3.2 billion in debt — to acquire five banners Supervalu acquired from the original Albertsons chain in 2006, including Acme in the Northeast, Jewel-Osco in the Midwest, Shaw’s and Star Markets in New England, and the Albertsons stores in the West that were not previously sold to Albertsons LLC.

As part of the current transaction, Symphony Investors, a separate investment group led by Cerberus, acquired a 21.2% ownership stake through new and acquired shares.

That triggered the appointment of Robert M. Miller as non-executive chairman of the board. In addition, Supervalu completed a restructuring of the company’s top management team and unveiled a plan to cut approximately 1,100 jobs.

The cutbacks will affect most departments at nearly all company offices, Supervalu said, though they will not impact store-level employees or employees at the Save-A-Lot operations. 

Deborah Weinswig, managing director at Citi Research, New York, said the cutbacks were “another step towards Supervalu’s New Year’s resolution to get trim,” adding she believes the new organization will be “more efficient and nimble.”

Read more: Supervalu Returns to Wholesaler, Save-A-Lot Focus

Supervalu will operate with three business units — independent distribution, which will account for 47% of the company’s $17 billion annual volume, Save-A-Lot (25%) and five regional retail banners (28%).

According to Weinswig, the sale of the retail chains “removed some of the weakest banners, including Shaw’s/Star Market and Albertsons, and the remaining ones should not require as much price investment.”

Following the Symphony investment in Supervalu, five directors resigned from the company’s board: Ronald Daly, Susan Engel, Edwin “Skip” Gage, Steven Rogers and Kathi Seifert.

Four current board members — Donald Chappel, Irwin Cohen, Philip Francis and Matthew Rubel — were joined by Lenard B. Tessler, senior managing director at Cerberus.

At the top management level, with Duncan at the helm, the company said Janel Haugarth would continue to serve as executive vice president and president of the independent business and supply chain services; Randy Burdick has been named EVP, chief information officer (succeeding Kathy Persian, senior vice president and CIO); and Michele Murphy was named EVP, human resources and corporate communications (succeeding Dave Pylipow).

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