Report: Supervalu to Begin Reaching Out to Potential Buyers
Supervalu, Inc., is expected to soon begin sending out financial information to prospective buyers, according to a Monday report by The Wall Street Journal, which cited unnamed “people familiar with the matter.”
The newspaper reported that private-equity firms such as Cerberus Capital Management, Kohlberg Kravis Roberts & Company, and TPG Capital—along with closely held grocery distributor C&S Wholesale Grocers, Inc.—are among those likely to be approached.
On Wednesday, struggling Supervalu said it is angling for a buyer. The Eden Prairie-based grocer indicated that it has tapped financial advisors at Goldman Sachs and Greenhill & Company for “a review of strategic alternatives.”
Supervalu CEO Craig Herkert said in an e-mail to employees that the review will include the possible sale of all or parts of the company. He told investors, meanwhile, that bankruptcy is not among the alternatives being considered.
Unnamed sources with knowledge of the matter reportedly told The Wall Street Journal that Supervalu is expected to send out confidentiality agreements to interested bidders this week. The company’s financial advisors haven’t yet told potential buyers if they’ll attempt to auction the company in pieces or as a whole, one of the sources reportedly said.
Unnamed sources also told the newspaper that C&S—which distributes grocery items to supermarkets, chain stores, and other retailers—is interested in buying Supervalu’s distribution operations. It reportedly could partner with a buyout firm and bid jointly for Supervalu, then separate the assets.
Meanwhile, buyout firms could be interested in Supervalu’s retail store brands, which include Albertsons, Shaw’s, Acme, Jewel-Osco, and Save-A-Lot, sources told The Wall Street Journal.
To read the newspaper’s full report on Supervalu, click here.
Supervalu’s Wednesday announcement about reviewing strategic alternatives was made in conjunction with the company’s first-quarter sales and earnings results, which were dismal. The company earned $41 million, or 19 cents per share, for the quarter that ended June 16—a year-over-year drop of about 45 percent and well shy of the 38 cents per share that analysts polled by Thomson Reuters were expecting. Revenue, meanwhile, totaled $10.6 billion, down 4.7 percent from the same period a year ago and less than the $10.8 billion that analysts expected.
In addition to exploring a possible sale, Supervalu is suspending its quarterly dividend, as well as its same-store sales and earnings guidance, and embarking on another round of significant cost cutting. (The company previously planned $75 million in cost reductions for this fiscal year, but now plans to slash costs by an additional $250 million over the next two years.)
Supervalu is among Minnesota’s five largest public companies based on revenue. It serves customers through a network of approximately 4,400 stores and has about 130,000 employees. The company reported a net loss of $1 billion on net sales of $36.1 billion in its most recently completed fiscal year.