Supervalu agrees to sell Albertsons
NEW YORK (AP) - Supervalu Inc. says it reached a deal to sell five of its biggest grocery chains - Albertson's, Acme, Jewel-Osco, Shaw's and Star Market - for $100 million in cash and more than $3 billion in debt.
The sale to AB Acquisition, an investor group led by Cerberus Capital Management, will include 877 stores. Cerberus will also offer to buy up to 30 percent of the remaining Supervalu for $4 per share after the deal closes.
The investor group will acquire the stores for $100 million in cash, and the new company will assume $3.2 billion in existing debt.
Supervalu has struggled for years to turn around its business. The broader supermarket industry has been facing growing competition from big-box retailers such as Target, drug store chains and even dollar stores. While bigger chains such as Kroger Co. have adapted by tweaking store formats and building customer loyalty through discount programs and improved offerings, Supervalu has scrambled to keep pace.
This summer, Supervalu fired its CEO and tapped Chairman Wayne Sales to lead a turnaround. The company said at the time that it was reviewing its options, such as putting itself up for sale.
Following the closing of the deal, Supervalu will consist of a food wholesaler, Save-A-Lot, and regional chains Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's. The company, based in Eden Prairie, Minn., is expected to generate annual revenue of more than $17 billion, down from $35 billion. Supervalu said it will continue to work on cutting costs and fixing its business.
Supervalu said grocery retail veteran Sam Duncan will replace Sales after the deal closes.
Its shares were up 15 percent at $3.51.