With the closing of the sale of its Save-A-Lot business to a Canadian company, Supervalu Inc. is looking forward to concentrating more closely on its core business as a grocery wholesaler.
Eden Prairie, Minn.-based Supervalu on Monday finalized the sale of its successful hard-discount grocery store chain to an an affiliate of Onex Corp., in Toronto, about a month ahead of schedule.
As part of the deal, Supervalu and Save-A-Lot have entered into a five-year professional services agreement under which Supervalu will continue providing certain back-office services to Save-A-Lot.
Stronger, More Focused
“With the successful completion of the Save-A-Lot sale, we are well positioned for the future with a stronger balance sheet, the opportunity to more strategically invest in our business, and the ability to more keenly focus on our core business as a leading grocery wholesaler,” said Supervalu President and CEO Mark Gross. “We also look forward to continuing our relationship with Save-A-Lot as one of our important professional services customers.”
Additionally, Supervalu has used $750 million of the net proceeds from the sale to prepay that portion of its outstanding term-loan balance. The company intends to use the remaining net-sale proceeds to further reduce debt and improve its capital structure and contribute to its pension plan, as well as to fund corporate and growth initiatives.
Barclays Capital Inc. and Greenhill & Co. LLC acted as financial advisers to Supervalu, and Wachtell, Lipton, Rosen & Katz is serving as its legal adviser.
Following today’s closing, Supervalu is now organized into two primary business segments, wholesale and retail.
With annual sales of about $13 billion, Supervalu serves customers across the United States through a network of 2,012 stores, composed of 1,815 stores operated by wholesale customers serviced primarily by the company’s food distribution business, and 197 traditional retail grocery stores operated under five retail banners. In addition, Supervalu operates 22 stores under the Shop ‘N Save name in Maryland, Pennsylvania, Virginia and West Virginia.