MINNEAPOLIS (MCT) — Supervalu Inc. has agreed to sell its four largest conventional supermarket chains to an investor group led by Cerberus Capital Management — a deal valued at $3.3 billion — while Cerberus also plans to buy up to 30 percent of the embattled grocery giant's stock for $4 per share.
With the deal, Supervalu will remain an independent, publicly traded firm, albeit a far smaller one.
Supervalu said Thursday that a Cerberus-led investor group will pay $100 million for Albertsons, Acme, Jewel and Shaw's/Star Markets, and take on $3.2 billion in Supervalu's debt. The deal includes 877 Supervalu-owned stores.
Save-A-Lot, a national discount grocery chain, will remain with Supervalu, as will five regional grocery chains. The Cerberus investor group includes Kimco Realty Corp., Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group. Cerberus is a large New York-based private equity firm.
A Cerberus-led group will buy the Supervalu stock at $4 per share, a 50 percent premium to its average closing price over the 30 days before Wednesday.
The deal with Cerberus effectively undoes the $12 billion megadeal Supervalu did in 2006 when it bought most of Albertsons. With that transaction, Supervalu gained Albertsons stores in Southern California, Las Vegas and the mountain west. Albertsons became its biggest chain.
As the economy deteriorated after the 2008 recession, Supervalu increasingly fell behind. With its large debt, it lacked the ability to swiftly cut prices and invest in its stores as much as was needed.
The new deal will unite all of Albertsons stores under common ownership. In the 2006 deal for Albertsons, Supervalu picked up 569 Albertsons outlets, while a group led by Cerberus bought 655 of Albertsons' underperforming stores, eventually selling off more than 400 of them.