Supervalu Completes Sale of Chains to Cerberus

MINNEAPOLIS — Supervalu here on Thursday said it has completed the sale of its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores to AB Acquisition LLC, an affiliate of a Cerberus Capital Management-led investor consortium for $3.3 billion.

The terms include $100 million in cash and the assumption of $3.2 billion in debt. As part of the transaction, Symphony Investors, an investor group led by Cerberus, also took a 21.2% stake in Supervalu through a tender offer and the purchase of new shares, making it Supervalu's largest shareholder.

Supervalu said it would transfer operations overnight and would “open for business on Friday as a more efficient wholesale and retail company with annual sales of approximately $17 billion.” It will continue to operate and license the Save-A-Lot limited assortment banner and five regional supermarket chains: Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s.

Sam Duncan

“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 chief executive officer. “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."

AB Acquisition will operate the banners it is acquiring from Supervalu under two separate divisions: New Albertsons Inc. (NAI), which will oversee Acme Markets in the Northeast, Jewel in the Midwest, and the Shaw's/Star stores in New England, plus all pharmacy operations; and Albertsons LLC, which will oversee its existing stores in the South, the Southwest and the Pacific Northwest while absorbing the Albertsons-banner stores in Southern California and the Intermountain West.

Besides Cerberus, based in New York, and Albertsons LLC, based in Boise, Idaho, the investor group includes Kimco Realty Corp., New Hyde Park, N.Y.; Klaff Realty LP, Chicago; Lubert-Adler Partners, Philadelphia; and Schottenstein Real Estate Group, Columbus, Ohio.

Read more: Supervalu Revamps Executive Ranks

With the close of the transaction, Robert Miller, president and chief executive officer of Albertsons LLC, becomes Supervalu’s new non-executive chairman, replacing Wayne Sales, who has been executive chairman since August 2012. Sales will remain on the board as a director along with four other current board members — Donald Chappel, Irwin Cohen, Philip Francis and Matthew Rubel.

As previously agreed upon, five directors voluntarily resigned from Supervalu’s board — Ronald Daly, Susan Engel, Edwin “Skip” Gage, Steven Rogers and Kathi Seifert. Lenard Tessler, senior managing director at Cerberus, also was appointed to the Supervalu board.

Supervalu also said that it has closed on a $1 billion asset based revolving credit facility led by Wells Fargo, US Bank and Rabobank and a $1.5 billion term loan secured by a portion of the company’s real estate, equipment and an equity pledge of Moran Foods LLC (the parent entity of the Save-A-Lot business) led by Goldman Sachs Bank USA, Credit Suisse, Morgan Stanley, Bank of America Merrill Lynch and Barclays. The financings replace a previous credit facility and other debt vehicles.

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