Supervalu Inc. has signed a definitive agreement by which it will sell five of its retail banners to an investor consortium for $3.3 billion. The company has also named Sam Duncan president and chief executive officer and Bob Miller non-executive chairman.


Supervalu Inc., Sam Duncan, Bob Miller, Albertsons Inc., Albertsons, Acme, Jewel-Osco, Shaw’s, Star Market, Osco, Sav-on, AB Acquisition LLC, Cerberus Capital Management LP, Kimco Realty Corp., Klaff Realty LP, Lubert-Adler Partners, Schottenstein Real Estate Group, Albertsons LLC, New Albertsons Inc., NAI, Symphony Investors, Fred Meyer Inc., Shopko Stores Inc., Wayne Sales, Robert Miller, Save-A-Lot, Cub, Farm Fresh, Shoppers, Shop ’n Save, Hornbacher’s, FactSet Research










































































































































































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Supervalu sheds five banners, names new CEO

January 10th, 2013

MINNEAPOLIS – Supervalu Inc. has signed a definitive agreement by which it will sell five of its retail banners to an investor consortium for $3.3 billion. The company has also named Sam Duncan president and chief executive officer and Bob Miller non-executive chairman.

In essence, the deal announced today reverses Supervalu’s acquisition of Albertsons Inc. in 2006. Under the terms of the agreement, Supervalu will sell its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market chains, representing 877 stores, as well as related Osco and Sav-on in-store pharmacies to AB Acquisition LLC, an affiliate of Cerberus Capital Management LP. The consortium also includes Kimco Realty Corp., Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group. AB Acquisition currently owns Albertsons LLC, based in Boise, Idaho.

The businesses included in the sale are part of New Albertsons Inc. (NAI), a wholly owned subsidiary formed by Supervalu. AB Acquisition is acquiring 100% of the stock of NAI for $100 million in cash, subject to around $3.2 billion in debt that will be retained by NAI.

In addition, within 10 days a newly formed acquisition entity owned by another Cerberus-led investor consortium, Symphony Investors, will make a cash tender offer for up to 30% of Supervalu’s outstanding common shares at a price of $4.00 per share. The offer represents a 50% premium to Supervalu’s 30-day average closing share price as of January 9.

If Symphony Investors does not acquire at least 19.9% of Supervalu’s outstanding shares, Supervalu will be obligated to issue a number of new common shares to Symphony Investors, at the tender offer price, that will give the investment group at least 19.9% of Supervalu’s outstanding shares prior to the issuance. These transactions are all subject to customary closing conditions, including refinancing of certain Supervalu debt, but are not subject to shareholder approval. The process is expected to occur during the first calendar quarter of 2013.

Upon closing of the transactions, five of the current Supervalu directors will resign and Sam Duncan, who held executive positions at Fred Meyer Inc. and later served as president and chief executive officer of Shopko Stores Inc., will replace Wayne Sales as president and CEO. The board will also be reduced in size to seven from the current 10 members. Five will be incumbents, while two will be designated by Symphony Investors, including Robert Miller, the current president and CEO of Albertson’s LLC and former chairman and CEO of Fred Meyer Inc. Miller will be non-executive chairman of Supervalu.

"I am excited by the opportunity to lead Supervalu," Duncan said in a statement. "The independent business is one of the largest food wholesalers in the United States. Save-A-Lot is the nation’s largest hard discount grocer. Additionally, the company’s streamlined retail operation consists of five strong regional banners."

Assuming the transactions are all completed, Supervalu will be left with its traditional wholesale business, which now serves about 1,950 stores; Save-A-Lot, now the largest hard discount grocery chain in the United States with about 1,300 stores; and a number of regional food banners including Cub, Farm Fresh, Shoppers, Shop ’n Save and Hornbacher’s. The down-sized Supervalu is expected to generate annual sales of more than $17 billion.

"The transactions announced today represent the successful culmination of the in-depth strategic review process we commenced this past summer," said Sales. "Symphony Investors’ tender offer provides our shareholders with an attractive premium to recent trading values of our shares, and they will acquire an equity stake in a newly refocused Supervalu with solid long-term prospects. At the same time, the stores being sold to AB Acquisition are complementary to Albertson’s LLC’s current operations, which are focused primarily on traditional retail grocery."

Separately, Supervalu released its third quarter fiscal financial results. The company booked net earnings of $16 million, or 8 cents per diluted share, on sales of $7.91 billion. Adjusted earnings were 3 cents per share, short of the average estimate of 6 cents per share among analysts surveyed by FactSet Research.

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