Supervalu stock falls on report of stalled talks
Supervalu shares plunge on report that talks with potential buyer have stalled
Supervalu Inc. shares fell sharply Thursday following a media report that the struggling grocer's talks with a potential buyer have stalled.
THE SPARK: Bloomberg, citing unnamed sources, reported that Cerberus Capital Management LP's pursuit of grocery chain Supervalu has stalled because the private-equity firm has had trouble obtaining the funds for a leveraged buyout.
A representative for Cerberus was not immediately available to comment.
Supervalu spokesman Mike Siemienas told The Associated Press that the company's review of its strategic options is still under way. He said the company is in active dialogue with a number of interested parties but there is no guarantee of the outcome.
THE BIG PICTURE: Supervalu announced in July that it was looking at its strategic options, including putting itself up for sale. The company has also suspended its dividend, closed stores, cut staff and replaced its CEO in the past year.
Supervalu, based in Eden Prarie, Minn., has struggled for a number of years to turn around its business. It was an industry laggard prior to the recession and was getting a revamp ready when the economy crumbled. It has been unable to keep up with the intense competition of other grocers, big box store and discount retailers.
Supervalu owns the Albertsons, Jewel-Osco, Save-A-Lot and other grocery chains.
THE ANALYSIS: Earlier this week, Citi analyst Deborah Weinswig raised her price target on Supervalu stock to $3 from $2, saying she was encouraged by the company's statement last month that it received a number of indications of interest and is in active dialogue with several parties to sell assets. She said Supervalu will have to shed some of its holdings to survive and "we envision a much slimmer entity medium to long term."
She also predicted the chain will continue to close stores. She kept a "Neutral" rating on the stock.
SHARE ACTION: Shares fell 52 cents, or 18.6 percent, to close at $2.28. Its stock has lost more than 70 percent of its value since January.
