Share This Page

Supervalu said to solicit bids for whole amid spotty interest

| Saturday, Aug. 25, 2012, 12:01 a.m.

Supervalu Inc.'s financial advisers are asking potential buyers to bid for the entire company, even as several suitors have inquired about individual parts of the grocery business, according to people with knowledge of the matter.

Cerberus Capital Management LP is examining a possible deal involving the Albertsons unit. Koninklijke Ahold NV, the Amsterdam-based parent of Giant Food Stores LLC, is interested in the Shoppers chain, which operates in Maryland, Virginia and Washington, one person said. Supervalu said in July that it hired Goldman Sachs Group Inc. and Greenhill & Co. to find a buyer.

While Eden Prairie, Minn.-based Supervalu's valuation is cheaper than its peers, it may prove difficult to find one purchaser for the company's 11 far-flung regional grocery chains.

In Western Pennsylvania, Supervalu operates Save-A-Lot stores, supplies Shop 'n Save, Foodland and Kuhn's supermarkets and operates a large distribution center in Westmoreland County.

“It's going to be very difficult to sell Supervalu as a whole,” said Charles Cerankosky, a Cleveland-based analyst at Northcoast Research Holdings LLC. “The most likely scenario, as opposed to what the board or management would like to do, is the company ends up being broken into pieces.”

Mike Siemienas, a spokesman for Supervalu, declined to comment on the sale process. Peter Duda, a spokesman for Cerberus, declined to comment. Jochem van de Laarschot, a spokesman for Ahold, said the company does not comment on rumors. Michael Duvally, a spokesman for Goldman Sachs, also declined to comment.

One possible outcome is that a private equity buyer will acquire the entire company, keep some of the chains and sell other pieces. Such bids would take longer to put together because the company would have to find interested parties for pieces of the retailer before approaching the company about a bid while respecting Supervalu's confidentiality requirements.

“Jewel in Chicago is very different than Save-A-Lot, which is very different than Albertsons in southern California,” one person said. “What all of the operating units have together is poor performance, which makes it difficult to go to a single buyer and say: ‘This is a growth story' or ‘This is easy to fix.' ”

The stock, which tumbled 74 percent this year, closed up 10.9 percent at $2.35, adding 23 cents on Friday, after news of action to sell the company.

Supervalu has more than 2,400 retail food stores, including 935 licensed Save-A-Lot locations, and its wholesale business has about 2,660 customers.

“The No. 1 problem is, everything in Supervalu costs too much” and is more expensive than Kroger and the discounters, said David Dietze, president and chief investment strategist at Summit, N.J.-based Point View Wealth Management, whose clients own Supervalu shares. “Customers are saying, ‘I can't afford to pay those prices, I'm going to drive out of town and stock up the minivan to save.' ”

Revenue at Supervalu is projected to drop 4.4 percent to $34.5 billion in the year ending in February, marking the fourth straight year of sales declines, according to data compiled by Bloomberg.

Save-A-Lot, which prices its food 40 percent less than traditional grocers, may be the most valuable of Supervalu's assets and may fetch as much as $1.94 billion, Deborah Weinswig, an analyst at Citigroup Inc., said in an Aug. 17 note. The grocer's distribution business may get about $817 million from a buyer, she said.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.