Supervalu Seeks Stockholder Support

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Supervalu Seeks Stockholder Support

By Jim Dudlicek - 07/09/2018
Supervalu Seeks Stockholder Support Company pushes ‘strategic transformation’ plan as activist investor backs new director slate

Supervalu Inc. is appealing directly to its stockholders, urging them to support the company’s slate of directors over nominees supported by an activist investor.

The Minneapolis-based grocery wholesaler and distributor further urges stockholders to vote for a proposal that it says will “facilitate strategic transformation” of the company, a strategy that is “already delivering measurable results,” Supervalu said in a statement Monday.

The votes are expected to take place at Supervalu’s annual stockholders meeting, scheduled for Aug. 16.

Supervalu is bearing down for a proxy battle with activist investor group Blackwells Capital, which has forwarded its own slate of directors in what the grocer says is an effort to control the company’s board. Blackwells has been urging changes at the company, which Supervalu’s leaders say are being made, but apparently not to the extent of speed Blackwells demands.

Meanwhile, Blackwells argues that it "has recruited and nominated six extremely talented professionals" as board candidates "to protect the investment of all shareholders and help Supervalu achieve its full potential."

Since April, Supervalu has been exploring its next steps, including a sale of the company.

“We have been taking decisive actions to create stockholder value by rapidly and strategically transforming Supervalu into the wholesale supplier of choice in the U.S. grocery industry – and we continue to make meaningful progress,” says Supervalu’s letter to stockholders, which the company released Monday. The letter decries Blackwells’ attempt to “seize control of your board,” which it argues poses “significant risk to the important progress the company is making in executing its ongoing strategic plan.”

The letter is signed by Board Chairman Donald R. Chappel, and President and CEO Mark Gross.

Supervalu is “making significant progress” in its transformation initiatives, the letter says, including the sale of its Save-A-Lot hard-discount banner in late 2016; turning around its wholesale business, including the acquisitions of Unified Grocers and Associated Grocers of Florida, to better service independent grocers; and selling off retail stores.

“We have taken decisive actions at both the wholesale and retail levels to enhance our competitive position within the changing food industry, strengthen our balance sheet and most importantly, to position the company to deliver long-term value to all stockholders,” the letter continues.

Blackwells takes issue with Supervalu's characterization of its transformation initiatives.

"As far as the company’s repeated claims over the past two years to be 'making significant progress,' one only needs to look at the company’s share price, revenues or margins to realize this is nothing but spin," Jeff Mathews, a spokesman for Blackwells, told PG.

In its own letter to Supervalu shareholders, Blackwells urges a vote in favor of its slate, which includes grocery retailing veterans Rick Anicetti and Frank Lazaran.

In addition to the retention of incumbent board members, Supervalu is asking for support of its proposed holding company reorganization,which the company expects to “organize and further segregate our wholesale and retail operations in an operationally efficient and strategic manner.”

With sales of $16 billion, Supervalu Inc. serves independent grocery stores across the United States. Its network includes a network of 3,324 stores, composed of 3,111 wholesale primary stores operated by customers serviced by Supervalu's food distribution business and 213 traditional retail grocery stores operated under five retail banners in six geographic regions.