Supervalu has sold Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market

[ennui]

I expect Shaws to completely shut down within a year, they can't compete in New England with the Stop & Shop chain, and especially not with Market Basket.

SUPERVALU Announces Definitive Agreement for Sale of Five Retail Grocery Banners to Cerberus-Led Investor Group

Tender Offer to Be Conducted for up to 30 Percent of SUPERVALU Shares at $4.00 Per ShareGrocery Retail Veteran Sam Duncan to Be Named SUPERVALU President and CEO; Bob Miller to Be Appointed Non-Executive Chairman of the Board

MINNEAPOLIS --

SUPERVALU Inc. (NYSE: SVU) announced today a definitive agreement under which it will sell its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related Osco and Sav-on in-store pharmacies (collectively, the “Bannersâ€) to AB Acquisition LLC (“AB Acquisitionâ€), an affiliate of a Cerberus Capital Management L.P. (“Cerberusâ€)-led investor consortium which also includes Kimco Realty Corporation (NYSE: KIM), Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group, in a transaction valued at $3.3 billion.

The sale will consist of the acquisition by AB Acquisition of the stock of New Albertsons, Inc. (“NAIâ€), a wholly-owned subsidiary of SUPERVALU, which owns the Banners, for $100 million in cash (the “Saleâ€). NAI will be sold to AB Acquisition subject to approximately $3.2 billion in debt, which will be retained by NAI. As part of the transaction, which includes 877 stores across the Banners, AB Acquisition-owned Albertson’s LLC will reunite its Albertson’s stores with the acquired NAI Albertsons stores.

In addition to the Sale, within ten business days of today, a newly-formed acquisition entity owned by a Cerberus-led investor consortium (“Symphony Investorsâ€) will conduct a tender offer for up to 30 percent of SUPERVALU’s outstanding common stock at a purchase price of $4.00 per share in cash (the “Tender Offerâ€). The Tender Offer represents a 50 percent premium to SUPERVALU’s thirty-day average closing share price as of January 9, 2013, and provides SUPERVALU’s shareholders with the opportunity to maintain an equity stake in SUPERVALU moving forward.

n the event that Symphony Investors does not obtain at least 19.9 percent of the outstanding shares of SUPERVALU common stock pursuant to the Tender Offer, SUPERVALU will be obligated to issue new shares of common stock to Symphony Investors (the “Issuanceâ€) at the Tender Offer price such that after giving effect to the Tender Offer and the Issuance, Symphony Investors would own a number of shares representing at least 19.9 percent of SUPERVALU’s outstanding common stock prior to the Issuance. SUPERVALU also will have the option to issue to Symphony Investors additional new shares of SUPERVALU common stock at the Tender Offer price (the “Optional Issuanceâ€), subject to (i) an overall cap of $250 million on Symphony Investors purchase of common stock pursuant to the Tender Offer, the Issuance and the Optional Issuance (collectively, the “Tender Offer Processâ€) and (ii) a total issuance of primary common shares of not more than 19.9 percent.

The transactions described above are subject to customary closing conditions, including the fully underwritten refinancing of certain SUPERVALU debt as described below. The closing of the Sale is also conditioned on among other things, the satisfaction of the conditions to the Tender Offer Process, and the closing of Symphony Investors acquisition of SUPERVALU common stock pursuant to the Tender Offer Process is conditioned on, among other things, closing of the Sale. Closing of the Sale and the Tender Offer Process (together the “Transactionsâ€) is expected to occur in the first calendar quarter of 2013. The Transactions are not subject to shareholder approval.

Management and Governance

Following the closing of the Transactions, SUPERVALU will be headed by grocery retail veteran Sam Duncan, as President and Chief Executive Officer, replacing current President, Chief Executive Officer and Chairman, Wayne Sales. In addition, effective upon the closing of the transactions, five current SUPERVALU directors will resign. Immediately following the closing of the transactions, the size of the Board will be reduced to seven members from the current ten members. This seven member Board will consist of five current SUPERVALU directors and two Board members designated by Symphony Investors, one of whom is Robert Miller, current President and CEO of Albertson’s LLC, who will serve as non-executive Chairman of the Board. Following the completion of a search process, the Board will be increased to a size of eleven directors, with the four new directors to consist of (i) Sam Duncan, (ii) an additional director appointed by Symphony Investors, and (iii) two additional independent Board members to be selected by the initial seven directors.

The New SUPERVALU

Following the Sale, SUPERVALU will consist of the Independent Business, a leading food wholesaler which serves 1,950 stores across the country; Save-A-Lot, the largest hard discount grocery chain in the United States, with approximately 1,300 stores; and SUPERVALU’s leading regional retail food banners Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s. As such, SUPERVALU is expected to generate annual revenues in excess of $17 billion. Key elements of SUPERVALU’s go-forward business plan include continued focus on right-sizing operations and maximizing efficiencies across the Company.

SUPERVALU and AB Acquisition also will enter into a Transition Services Agreement pursuant to which the parties will provide each other with various services.

Financing

In connection with the Transactions, SUPERVALU has negotiated a new and fully underwritten $900 million asset based revolving credit facility led by Wells Fargo and a $1.5 billion term loan secured by a portion of the Company’s real estate 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 proceeds of these financings will be used to replace the existing $1.65 billion asset-based revolving credit facility, the existing $846 million term loan, and to call and refinance $490 million of 7.5 percent bonds scheduled to mature in November 2014.

Successful Culmination of Strategic Review Process; Ongoing SUPERVALU Operations Better Positioned for Future

In commenting on the definitive agreement, Mr. Sales said: “The transactions announced today represent the successful culmination of the in-depth strategic review process we commenced this past summer. Following the Sale, SUPERVALU will have three strong, market-leading business units with more consistent cash flows and improved EBITDA growth potential. 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.â€

Mr. Duncan said: “I am excited by the opportunity to lead SUPERVALU. The Company has very solid market positions and I see great potential in our ability to successfully build on each of these three core businesses.†Duncan continued, “The Independent Business is one of the largest food wholesalers in the United States, serving many of the country’s most successful independent operators. Save-A-Lot is the nation’s largest hard discount grocer, providing the Company an important presence in this fast growing segment of food retail. Additionally, the Company’s streamlined retail operation consists of five strong regional banners. I’m looking forward to working with SUPERVALU’s team members to quickly and effectively improve the Company’s business.â€

Mr. Miller said: “As Chairman of SUPERVALU’s reconstituted Board, working closely with Sam Duncan and the SUPERVALU management team, we will focus on strengthening the Company’s market leading positions and delivering compelling value to our shareholders. Sam, whom I had the pleasure of working with at Fred Meyer, is an extremely talented retail executive, with more than 40 years of experience in retail, including turnarounds. He is well positioned to build upon the foundation Wayne Sales laid for improved performance. In addition, the acquisition by Symphony Investors of up to 30 percent of the Company is a strong vote of confidence in the future of SUPERVALU. I share their strong belief in the Company’s future potential.â€

“We are pleased to be making this investment and look forward to helping build long-term value for all stakeholders,†said Lenard Tessler, Co-Head of Global Private Equity and Senior Managing Director at Cerberus. “We beieve these transactions will create stronger, more competitive businesses.â€...

http://www.fortmilltimes.com/2013/01/10/2427742/supervalu-announces-definitive.html

 

[kewpon addict]

Who do you think will replace them Ennui...or will their stores remain vacant...I remember when some dominicks went out of business around here..many of their stores were vacant for yrs.

 

[fords8]

Heard this morning that supervalu distribution plant is going to close this ??May?? in Kenosha and over 100 workers will lose their jobs. Many are being offered to transfer to Green Bay.

Just thought I'd share a bit of local flavor.

 

[ennui]

Who do you think will replace them Ennui...or will their stores remain vacant...I remember when some dominicks went out of business around here..many of their stores were vacant for yrs.

Market Basket is expanding, but is building new stores. Stop & Shop may take over a few in choice locations, but none of the other NE chains are really expanding. Wegman's is just beginning to come in, but they are very selective which towns are wealthy enough and their stores are much, much larger than any old Shaws was.

I'm sure many will be vacant for years, like the long gone Bradlees, Caldors, Ann & Hope, Almacs, Ames, Filene's Basement, Syms, etc...

 

[Fuzzysox]

Market Basket is expanding, but is building new stores. Stop & Shop may take over a few in choice locations, but none of the other NE chains are really expanding. Wegman's is just beginning to come in, but they are very selective which towns are wealthy enough and their stores are much, much larger than any old Shaws was.

My friend Melanie, formerly the Coupon Goddess, shops there and no longer goes to Shaws because their prices are way too high.

 

[Fuzzysox]

I personally see more Jewel stores closing and becoming Save-a-Lot stores. I could be wrong but the Jewels near my house are always dead. The meat department hardly puts a lot of meat out and the pharmacy no longer has huge lines. I see more and more people at Target shopping for their food as well as their meds.

 

[FrugalSandy]

Should I be worried about my Jewel GCs?

 

[KG]

Who do you think will replace them Ennui...or will their stores remain vacant...I remember when some dominicks went out of business around here..many of their stores were vacant for yrs.

the one in Wauconda is still vacant (SW corner of the intersection of 12 and 176).

Cerberus is not in the grocery biz; they are a private equity firm. My guess is their plan is not to own these chains for the long-term, but to sell off the parts for more than they spent on the whole.

 

[lf5058]

Like KG says, Cerberus is a private equity firm, not so much on grocery business, some of the stores are sitting on premium land/real estate, so Cerberus may be eyeing on property development at this locations.

 

[tuppermom6]

"...Key elements of SUPERVALU’s go-forward business plan include continued focus on right-sizing operations and maximizing efficiencies across the Company...."

there will definitely be some store closures, I hope they are decent enough to offer severance and some extended health care coverage. Does anyone know if all of their stores are unionized?

 

[ennui]

My friend Melanie, formerly the Coupon Goddess, shops there [Market Basket]and no longer goes to Shaws because their prices are way too high.

They opened 2 new Market Baskets in Southeastern MA in the last year, they are absolute gold mines, MB management is beyond thrilled. They are NEVER empty. They don't double coupon but their prices are fantastic. I shop there every week.

Like KG says, Cerberus is a private equity firm, not so much on grocery business, some of the stores are sitting on premium land/real estate, so Cerberus maye eyeing on property development at this locations.

Cerberus also now into the for-profit hospital business in MA. They bought the previously non-profit Caritas Christi hospital chain from the Archdiocese of Boston a year or two ago. The church couldn't afford to run them anymore, were hundreds of millions in debt.

Cerberus has since been buying up secular non-profit hospitals and medical practices all over eastern MA

 

[coyote]

BOISE, Idaho, Jan 10, 2013 (BUSINESS WIRE) -- Albertson's LLC announced today that its parent company, AB Acquisition LLC, ("Albertson's") has signed a definitive agreement under which it will acquire Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores and related Osco and Sav-on in-store pharmacies (collectively, the "Stores") currently owned by Minneapolis-based SUPERVALU Inc. The transaction will consist of Albertson's acquisition of the stock of New Albertsons, Inc. ("NAI"), a wholly-owned subsidiary of SUPERVALU Inc., for $100 million in cash plus the assumption of approximately $3.2 billion in debt. Upon closing, Albertson's will own both NAI and Albertson's LLC.

Bob Miller, CEO of Albertson's LLC, said of the acquisition, "We are very excited about the opportunity to acquire Acme, Albertsons, Jewel-Osco, and Shaw's and Star Market. We see great potential to improve operations, drive new energy and create a 'winning attitude' with our store-level associates, and earn back our customers' trust and business." Miller continued, "In 2006, we acquired a set of stores that lacked investment and were in tough shape, but with our great associates taking care of our customers every day we have grown into a solid regional supermarket chain with growing sales. I believe we can be successful again."

Following the acquisition, Albertson's and its subsidiaries will consist of 1,069 stores and 12 distribution centers, and employ approximately 110,000 associates.

The transaction is subject to customary closing conditions and the completion of the fully underwritten debt financing at Albertson's LLC and NAI, which has been provided by a consortium of banks including Bank of America, Merrill Lynch, Citigroup, Credit Suisse, Morgan Stanley and Barclays.

Albertson's LLC retained Lazard as lead M&A advisor. Barclays also served as an M&A advisor to Albertson's LLC.

About Albertson's LLC Established in 2006, Albertson's LLC is working to become the favorite food and drug retailer in every market it serves. The company is privately owned by Cerberus Capital Management, Kimco Realty Corporation, Klaff Realty, Lubert-Adler Partners, and Schottenstein Stores Corporation. The company operates 190 Albertson's Market-branded stores and two Super Saver Foods stores in eight states and employs approximately 20,000 associates. For more information, please visit www.AlbertsonsMarket.com .

 

[lf5058]

http://www.chicagobusiness.com/arti...may-have-short-shelf-life-as-part-of-cerberus

Jewel-Osco's buyers aren't expected to hold onto the chain for long.

An investor group led by New York-based Cerberus Capital Management L.P. has agreed to buy the chain and several others from Supervalu Inc. in a deal announced today. But most knowledgeable observers think the group will keep the Albertsons business and sell the others, including Jewel.

Grocery chain Kroger Co. is a possible taker of Jewel-Osco, the biggest local grocery chain, with some 180 stores, the vast majority in the Chicago area. By comparison, Dominick's has 73 stores in the Chicago area.

Cincinnati-based Kroger has no full-line stores in Chicago.

“Kroger is the only logical buyer,” said Bill Bishop, a veteran retail food consultant in Barrington. “The big question will be price. Kroger has a history of not overpaying for its acquisitions.”

Both price and timing will become issues, predicts Neil Stern, a senior partner at retail consultancy McMillan-Doolittle LLP in Chicago. Judging by the top-flight retail management team that Cerberus has recruited already, he believes that its new owners may elect to operate Jewel for a while — perhaps up to three years — before selling.

“This is a chain that needs turning around,” Mr. Stern said. “If Cerberus and its partners can make Jewel more profitable, they can yield more from a sale down the road.”

Jewel, which has $5 billion in revenue and some 25,000 employees, has been criticized for bland product assortments in recent years and an inability to sell effectively to ethnic audiences. The chain should be more competitive under new ownership, with lower pricing and better products, and better prepared to defend its market share against rivals such as Dominick's Finer Foods and Wal-Mart Stores Inc.

“Jewel needs to become more price-competitive,” Mr. Stern said. “They have to eliminate the price disadvantage they have now versus their competitors. Ineffective merchandising and pricing have been the big things contributing to a loss of market share for Jewel in recent years.”

Low prices are complicated by the benefit-rich unionized workforce Jewel employs, while most of its rivals are non-union. But most observers don't think the unions will deter interest from Kroger, which operates with unions in a wide array of markets around the country.

Kroger did not immediately return a call.

A spokeswoman for the buyers noted in an email that the deal still needs government approvals. “There are no immediate, specific plans for any of the” chains being acquired, she wrote.

While suburban Minneapolis-based Supervalu was loath to downsize Jewel, Mr. Stern and others predict that the new owners will sell off 20 or more lesser-performing stores, perhaps offering them to newer rivals in the market such as Roundy's Inc.'s Mariano's Fresh Market unit.

Cerberus' partners, including Chicago-based Klaff Realty L.P. and New Hyde Park, N.Y.-based Kimco Realty Corp., are all real estate specialists and played central roles in selling off surplus stores in Florida, California and Texas as part of an earlier Cerberus-led supermarket acquisition some six years ago. Crain's reported in August that Klaff was considering bidding for Jewel-Osco or other parts of Supervalu.

“Chains like Whole Foods are looking to expand around Chicago and would probably have some interest in the locations that Jewel doesn't want,” said Michael Bell, president of Pentad Realty Inc. in Chicago.

Read more: http://www.chicagobusiness.com/arti...-shelf-life-as-part-of-cerberus#ixzz2HcOEgwa7
Stay on top of Chicago business with our free daily e-newsletters

 

[fords8]

Heard this morning that supervalu distribution plant is going to close this ??May?? in Kenosha and over 100 workers will lose their jobs. Many are being offered to transfer to Green Bay.

Just thought I'd share a bit of local flavor.

Meijer purchased it a while ago now (month? 2?). They also are building a Meijer in Kenosha to open in 2014.

 

[CharlieQ]

Who do you think will replace them Ennui...or will their stores remain vacant...I remember when some dominicks went out of business around here..many of their stores were vacant for yrs.

A lot of the vacant "old Dominick's" stores were still being leased by Dominick's.
I don't quite get the logic, but somehow it was beneficial to pay rent on an empty space rather than let a competitor take over the space. :9:

 

[kaeg1]

The Shaws around here are nasty! The one closest to me has turned into a Save A Lot type store, with supposedly better deals. The store just looks skeevy.

 

[kewpon addict]

A lot of the vacant "old Dominick's" stores were still being leased by Dominick's.
I don't quite get the logic, but somehow it was beneficial to pay rent on an empty space rather than let a competitor take over the space. :9:

Really Charlie? That just sound SO STUPID....I don't get it...why wouldn't they just try reopening them? Of course money is still a factor but I don't get why they'd still be renting them.

 

[fords8]

If the subject is stupid stuff grocers do, I would like to put one out there.....


Doms put in clinics (like Walgreens has). My Doms has had a COMPLETED clinic area for ALMOST a year now....and all they do is give shots in it so far. Seems like a LARGE investment for something they basically aren't using. DUH

YEAH...."stupid investment for $100"

 

[fords8]

Stupid grocer spending for $200.....

Jewel keeps putting up LARGE STURDY signs for promotions. LOTS AND LOTS of signs. Some last as short as 2-3 weeks. That is a LOT of expense for 180 stores for a store that lost $4 MIL last year.

DUH...

 

[ennui]

Really Charlie? That just sound SO STUPID....I don't get it...why wouldn't they just try reopening them? Of course money is still a factor but I don't get why they'd still be renting them.

It is quite common, they would rather pay rent than let a competitor move in. Stop & Shop has done that for years, keeping empty Bradlees stores vacant.