Save-A-Lot Files for IPO
Supervalu continues to explore the potential spin-off of its Save-A-Lot business as it filed an IPO with the U.S. Securities and Exchange Commission. While the move does not guarantee Save-A-Lot will become a separate, publicly traded company, it paves the way for splitting the thriving retail division from its slower-growing wholesale operations.
Minneapolis-based Supervalu, one of the largest grocery wholesalers and retailers in the U.S., began exploring the sale of its Save-A-Lot retail business in July 2015.
In a letter to stockholders, Save-A-Lot's new CEO Eric Claus, who assumed his position earlier this week, said: "As an independent, publicly traded company, we believe we can more effectively focus on our growth and operating objectives and specific business characteristics, and thus bring more value to you as a stockholder than we could as an operating segment of Supervalu."
The company currently operates 441 Save-A-Lot locations through its corporate stores business and 901 locations operated by licensees, spanning 38 states, the Caribbean and Central America.
Once the separation is complete, Supervalu stockholders will own at least 80.1 percent of the outstanding shares of common stock of Save-A-Lot, which will be listed on the NYSE. Each Supervalu stockholder will recieve one share of Save-A-Lot common stock for every share of Supervalu common stock at the close of business on the record date.
"After the separation, Supervalu and Save-A-Lot will each strive to be an industry leader in terms of both produts and services in their respective businesses," stated Supervalu CEO/President Sam Duncan in a letter to Supervalu stockholders. "We believe Supervalu will be able to focus on providing wholesale distribution services to independent retail customers and operating its five regionally based traditional-format grocery banners. Save-A-Lot will continue to be a leader in hard discount grocery retailing in the United States."
Claus' letter stated that Save-A-Lot stores will tailor its merchandising mix to meet the specific needs of local demographics as well as continue to offer a line of private label products.
By day's end, 5.76 million shares of Supervalu were traded vs. the company's 30-day average of 2.92 million shares. Supervalu's stock declined 6.6 percent to $6.26 in mid-afternoon trading on Thursday amid a sharp downturn in global stocks.
The Save-A-Lot IPO news follows on the heels of Supervalu losing one of its longtime independent grocery customers, Gordy’s Market, which named SpartanNash its primary wholesaler earlier this week.
As PG reported, Gordy's switch from Supervalu to SpartanNash came as "a bit of a surprise" for an industry observer who requested anonymity, who added that it "might well be a reflection of some of the changes occurring at Supervalu," including the retirements of President/CEO Sam Duncan and Janel Haugarth, EVP and president of Independent Business and Supply Chain Services, as well as the anticipated pending spin-off of its Save-A-Lot division.