Supervalu completes $3.3B asset sale to Cerberus

MINNEAPOLIS (AP) -- Supervalu Inc. has completed the sale of five of its grocery chains to Cerebus Capital Management LP in a deal valued at $3.3 billion, including debt.

The Minneapolis company also announced a new chairman and other changes to its board of directors.

Supervalu announced in January that it would sell its Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores and related Osco and Sav-on in-store pharmacies to AB Acquisition LLC, an affiliate of Cerberus, in a deal worth $100 million in cash and $3.2 billion in debt assumption.

Supervalu has struggled for years with tough competition from other grocery chains, dollar stores and big box retailers like Target and Walmart. The company will now focus its efforts on its Save-A-Lot discount stores, as well as its smaller regional chains such as Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's. It will also keep its wholesale business that distributes products to grocery stores.

The company said operation of the stores involved in the deal will transfer overnight. After the transfer, the company said it will be a "more efficient wholesale and retail company" with roughly $17 billion in annual sales.

The company also said Thursday Robert Miller, president and CEO of Albertsons LLC, becomes Supervalu's new non-executive chairman of the board replacing Wayne Sales, who has served as executive chairman since August.

Sales will remain on the board as a director, along with four other current board members: Donald Chappel, Irwin Cohen, Philip Francis and Matthew Rubel. As previously agreed upon by Supervalu and Symphony Investors, a Cerberus-led investor consortium, five directors voluntarily resigned from the board effective Thursday: Ronald Daly, Susan Engel, Edwin Gage, Steven Rogers and Kathi Seifert.

Lenard Tessler, a designee of Symphony Investors, also was appointed to the Supervalu board Thursday. He serves as co-head global private equity and senior managing director of Cerberus Capital Management.

The seven-person board will eventually increase to 11 directors. The board will seek two additional independent directors, and once they are selected, Sam Duncan, Supervalu's president and CEO, and Mark Neporent, chief operating officer and general counsel for Cerberus, will also join the board.

Shares of Supervalu jumped almost 12 percent, or 48 cents, to $4.67 in midday trading. The stock is up 89 percent in the year to date, but is still down 25 percent from one year ago.