Supervalu plans to sell grocery chains to Cerberus

Good valu?

Supervalu announced plans to sell five of its grocery chains to Cerberus for $100 million in cash and a $3.2 billion debt reduction, sending shares higher on Thursday. The Supervalu deal with Cerberus will involve selling five different brands – including Albertson's, Jewel-Osco, and Shaws – for a sale price of $3.3 billion. In addition, Cerberus will lead a consortium that will make a tender offer for up to 30% of the company at $4 per share.

"I think it is hugely 'de-risk' because of the growth opportunities that we have at Save-A-Lot; the stability of our independent business; and the leading market shares that we have with the remaining banners," which are smaller; more regional; and require less of an investment to turn sales around than those that it's selling, outgoing CEO Wayne Sales commented. He is set to be replaced by grocery retail veteran Sam Duncan and the company also announced that Bob Miller, former COO of Kroger (KR) was announced as a non-chairman.

The company is looking to turn the ship around after posting more than three years of declining sales in the face of competition from dollar stores and mega-retailers and has recently failed in its attempt to keep prices low while retaining strong margins.

Supervalu (SVU : NYSE : US$3.46), Net Change: 0.42, % Change: 13.81%, Volume: 57,588,389

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Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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