Supervalu Split Complete

Minneapolis-based Supervalu Inc. has completed the $3.3 billion sale of its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related in-store pharmacies to AB Acquisition LLC.

The deal with the affiliate of a Cerberus Capital Management L.P.-led investor consortium includes $100 million in cash and $3.2 billion in debt assumption. Operations for these banners will transfer overnight, and the new Supervalu will open for business on Friday as what its leaders are calling “a more efficient wholesale and retail company” with annual sales of around $17 billion.

“The successful completion of this transaction marks a significant milestone for Supervalu and our shareholders, customers and employees,” said Sam Duncan, Supervalu’s president and CEO. “As we move forward, Supervalu will continue as one of the largest wholesale grocery providers in America serving nearly 2,000 independent retailers in 43 states. We plan to continue growing our hard discount Save-A-Lot format that includes over 1,300 stores nationwide, and we will operate five strong regional retail banners. I am pleased to be leading Supervalu during this time of change and strongly believe there is an exciting future ahead for us.”

The sale is the culmination of a transformative journey for the struggling grocer that began last July when Supervalu ousted chief exec Craig Herkert following a string of negatively performing quarters. Company director Wayne Sales took Herkert’s place at the helm to oversee a turnaround that resulted in the sale of Supervalu’s five regional banners, which it acquired for $12 billion in 2006. The new deal allows the “new” Supervalu to essentially return to its roots and concentrate more of its efforts on supplying independent retailers and growing its profitable Save-A-Lot banner.

As part of the transaction, Symphony Investors, a Cerberus-led investor consortium, completed its tender offer resulting in the acquisition of nearly 11.7 million shares (approximately 5.475 percent of outstanding common stock) at $4 per share in cash. The company further issued 42.4 million new shares of common stock to Symphony at the same price, totaling $170 million, making the consortium Supervalu’s largest shareholder.

With the close of the deal, Robert Miller, president and CEO of Albertsons LLC, becomes Supervalu’s new non-executive chairman, replacing Sales, who served as executive chairman since August 2012. Sales will remain on the board with four other current board members: Donald Chappel, Irwin Cohen, Philip Francis and Matthew Rubel. Five directors voluntarily resigned from the board: Ronald Daly, Susan Engel, Edwin “Skip” Gage, Steven Rogers and Kathi Seifert.

Also appointed to the board was Lenard Tessler, a designee of Symphony Investors, and co-head of global private equity and senior managing director of Cerberus Capital Management.

“I am pleased to be joining Supervalu’s board of directors and am optimistic that together with Sam and his executive team we can reposition the company for future success,” Miller said. “The new board will work quickly to select two additional directors who will provide experience and knowledge that is complementary to our board members.”

With the transaction complete, Supervalu now consists of three business units: Independent Business, a leading food wholesaler which serves nearly 2,000 stores across the country; Save-A-Lot, the largest hard-discount grocery chain in the United States with more than 1,300 stores; and five regional retail banners: Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s.


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