Thursday, January 10, 2013

Supervalu sells Acme and four other brands; Kimco in on the deal

Supervalu announced this morning it has a deal in place to sell Acme and four other supermarket chains for $3.3 billion to a group led by Cerberus Capital. The Cerberus group includes Kimco, the largest shopping center owner in the U.S., and Lubert-Adler Partners of Philadelphia, among others. Albertsons, Jewel-Osco, Shaw's and Star Market stores will be sold along with Acme.

Save-A-Lot, which has several stores in the Philadelphia region, will remain with Supervalu, along with Cub Foods, Farm Fresh, Shoppers, Shop 'n Save and Hornbachers. The company's food distribution business will also remain as part of Supervalu.

The Cerberus group is paying $100 million in cash and will assume approximately $3.2 billion in debt. It will also offer to purchase 30% of what remains of Supervalu for $4 per share. As of 12 noon today, Supervalu's stock was listed at $3.34 per share.

Wayne Sales, who was named Supervalu CEO last July, will be replaced by former OfficeMax CEO Sam Duncan.

The deal, which is projected to close by the end of the first quarter, includes 877 stores. Cerberus currently owns the Albertsons stores operated by Albertsons LLC, and once the deal closes they will own all Albertsons stores.

Acme, once the dominant grocer in the Philadelphia region and still one of the area's largest employers, has over 13,000 local workers at more than 100 supermarkets. Joe DiStefano of the Philadelphia Inquirer points out in his blog post today that Lubert Adler purchased Mervyn's department store in the late 2000s, then shut down the chain after paying itself millions in dividends. Although a court ordered them to repay the chain's creditors, the firm still profited from the deal.

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