Tender Offer to Be Conducted for up to 30 Percent of SUPERVALU Shares
at $4.00 Per Share
Grocery Retail Veteran Sam Duncan to Be Named SUPERVALU President and
CEO; Bob Miller to Be Appointed Non-Executive Chairman of the Board
MINNEAPOLIS--(BUSINESS WIRE)--Jan. 10, 2013--
SUPERVALU Inc. (NYSE: SVU) announced today a definitive agreement under
which it will sell its Albertsons, Acme, Jewel-Osco, Shaw’s and Star
Market stores and related Osco and Sav-on in-store pharmacies
(collectively, the “Banners”) to AB Acquisition LLC (“AB Acquisition”),
an affiliate of a Cerberus Capital Management L.P. (“Cerberus”)-led
investor consortium which also includes Kimco Realty Corporation (NYSE:
KIM), Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real
Estate Group, in a transaction valued at $3.3 billion.
Sam Duncan (Photo: Business Wire)
The sale will consist of the acquisition by AB Acquisition of the stock
of New Albertsons, Inc. (“NAI”), a wholly-owned subsidiary of SUPERVALU,
which owns the Banners, for $100 million in cash (the “Sale”). NAI will
be sold to AB Acquisition subject to approximately $3.2 billion in debt,
which will be retained by NAI. As part of the transaction, which
includes 877 stores across the Banners, AB Acquisition-owned Albertson’s
LLC will reunite its Albertson’s stores with the acquired NAI Albertsons
In addition to the Sale, within ten business days of today, a
newly-formed acquisition entity owned by a Cerberus-led investor
consortium (“Symphony Investors”) will conduct a tender offer for up to
30 percent of SUPERVALU’s outstanding common stock at a purchase price
of $4.00 per share in cash (the “Tender Offer”). The Tender Offer
represents a 50 percent premium to SUPERVALU’s thirty-day average
closing share price as of January 9, 2013, and provides SUPERVALU’s
shareholders with the opportunity to maintain an equity stake in
SUPERVALU moving forward.
In the event that Symphony Investors does not obtain at least 19.9
percent of the outstanding shares of SUPERVALU common stock pursuant to
the Tender Offer, SUPERVALU will be obligated to issue new shares of
common stock to Symphony Investors (the “Issuance”) at the Tender Offer
price such that after giving effect to the Tender Offer and the
Issuance, Symphony Investors would own a number of shares representing
at least 19.9 percent of SUPERVALU’s outstanding common stock prior to
the Issuance. SUPERVALU also will have the option to issue to Symphony
Investors additional new shares of SUPERVALU common stock at the Tender
Offer price (the “Optional Issuance”), subject to (i) an overall cap of
$250 million on Symphony Investors purchase of common stock pursuant to
the Tender Offer, the Issuance and the Optional Issuance (collectively,
the “Tender Offer Process”) and (ii) a total issuance of primary common
shares of not more than 19.9 percent.
The transactions described above are subject to customary closing
conditions, including the fully underwritten refinancing of certain
SUPERVALU debt as described below. The closing of the Sale is also
conditioned on among other things, the satisfaction of the conditions to
the Tender Offer Process, and the closing of Symphony Investors
acquisition of SUPERVALU common stock pursuant to the Tender Offer
Process is conditioned on, among other things, closing of the Sale.
Closing of the Sale and the Tender Offer Process (together the
“Transactions”) is expected to occur in the first calendar quarter of
2013. The Transactions are not subject to shareholder approval.
Management and Governance
Following the closing of the Transactions, SUPERVALU will be headed by
grocery retail veteran Sam Duncan, as President and Chief Executive
Officer, replacing current President, Chief Executive Officer and
Chairman, Wayne Sales. In addition, effective upon the closing of the
transactions, five current SUPERVALU directors will resign. Immediately
following the closing of the transactions, the size of the Board will be
reduced to seven members from the current ten members. This seven member
Board will consist of five current SUPERVALU directors and two Board
members designated by Symphony Investors, one of whom is Robert Miller,
current President and CEO of Albertson’s LLC, who will serve as
non-executive Chairman of the Board. Following the completion of a
search process, the Board will be increased to a size of eleven
directors, with the four new directors to consist of (i) Sam Duncan,
(ii) an additional director appointed by Symphony Investors, and (iii)
two additional independent Board members to be selected by the initial
The New SUPERVALU
Following the Sale, SUPERVALU will consist of the Independent Business,
a leading food wholesaler which serves 1,950 stores across the country;
Save-A-Lot, the largest hard discount grocery chain in the United
States, with approximately 1,300 stores; and SUPERVALU’s leading
regional retail food banners Cub, Farm Fresh, Shoppers, Shop ‘n Save and
Hornbacher’s. As such, SUPERVALU is expected to generate annual revenues
in excess of $17 billion. Key elements of SUPERVALU’s go-forward
business plan include continued focus on right-sizing operations and
maximizing efficiencies across the Company.
SUPERVALU and AB Acquisition also will enter into a Transition Services
Agreement pursuant to which the parties will provide each other with
In connection with the Transactions, SUPERVALU has negotiated a new and
fully underwritten $900 million asset based revolving credit facility
led by Wells Fargo and a $1.5 billion term loan secured by a portion of
the Company’s real estate and an equity pledge of Moran Foods, LLC (the
parent entity of the Save-A-Lot business) led by Goldman Sachs Bank USA,
Credit Suisse, Morgan Stanley, Bank of America Merrill Lynch and
Barclays. The proceeds of these financings will be used to replace the
existing $1.65 billion asset-based revolving credit facility, the
existing $846 million term loan, and to call and refinance $490 million
of 7.5 percent bonds scheduled to mature in November 2014.
Successful Culmination of Strategic Review Process; Ongoing SUPERVALU
Operations Better Positioned for Future
In commenting on the definitive agreement, Mr. Sales said: “The
transactions announced today represent the successful culmination of the
in-depth strategic review process we commenced this past summer.
Following the Sale, SUPERVALU will have three strong, market-leading
business units with more consistent cash flows and improved EBITDA
growth potential. Symphony Investors' tender offer provides our
shareholders with an attractive premium to recent trading values of our
shares and they will acquire an equity stake in a newly refocused
SUPERVALU with solid long-term prospects. At the same time, the stores
being sold to AB Acquisition are complementary to Albertson’s LLC’s
current operations, which are focused primarily on traditional retail
Mr. Duncan said: “I am excited by the opportunity to lead SUPERVALU. The
Company has very solid market positions and I see great potential in our
ability to successfully build on each of these three core businesses.”
Duncan continued, “The Independent Business is one of the largest food
wholesalers in the United States, serving many of the country’s most
successful independent operators. Save-A-Lot is the nation’s largest
hard discount grocer, providing the Company an important presence in
this fast growing segment of food retail. Additionally, the Company’s
streamlined retail operation consists of five strong regional banners.
I’m looking forward to working with SUPERVALU’s team members to quickly
and effectively improve the Company’s business.”
Mr. Miller said: “As Chairman of SUPERVALU’s reconstituted Board,
working closely with Sam Duncan and the SUPERVALU management team, we
will focus on strengthening the Company’s market leading positions and
delivering compelling value to our shareholders. Sam, whom I had the
pleasure of working with at Fred Meyer, is an extremely talented retail
executive, with more than 40 years of experience in retail, including
turnarounds. He is well positioned to build upon the foundation Wayne
Sales laid for improved performance. In addition, the acquisition by
Symphony Investors of up to 30 percent of the Company is a strong vote
of confidence in the future of SUPERVALU. I share their strong belief in
the Company’s future potential.”
“We are pleased to be making this investment and look forward to helping
build long-term value for all stakeholders,” said Lenard Tessler,
Co-Head of Global Private Equity and Senior Managing Director at
Cerberus. “We believe these transactions will create stronger, more
Bios of Sam Duncan and Robert Miller are attached to this press release.
Goldman Sachs & Co. and Greenhill & Co., LLC served as financial
advisors to SUPERVALU in connection with the Company’s strategic review
and the Transactions. Wachtell, Lipton, Rosen & Katz served as
SUPERVALU’s legal counsel. Cerberus was advised by Lazard along with
Barclays. Barclays will also serve as dealer manager for the Tender
Offer. Schulte Roth & Zabel LLP served as Cerberus’s legal counsel.
The Transactions will be discussed on the conference call to review
SUPERVALU’s third quarter, which is scheduled for 9:00 a.m. central time
today. The call will be webcast live at www.supervaluinvestors.com
(click on microphone icon). A replay of the call will be archived at www.supervaluinvestors.com.
To access the website replay go to the “Investors” link and click on
"Presentations and Webcasts."
About SUPERVALU Inc.
SUPERVALU Inc. is one of the largest companies in the U.S. grocery
channel with annual sales of approximately $35 billion. SUPERVALU serves
customers across the United States through a network of approximately
4,350 stores composed of 1,068 traditional retail stores, including 778
in-store pharmacies; 1,329 Save-A-Lot stores, of which 946 are operated
by licensee owners; and 1,950 independent stores serviced primarily by
the Company’s food distribution business. SUPERVALU has approximately
125,000 employees. For more information about SUPERVALU visit www.supervalu.com.
About Cerberus Capital Management, L.P.
Established in 1992, Cerberus Capital Management, L.P. is one of the
world's leading private investment firms. Cerberus has more than US $20
billion under management invested in four primary strategies: distressed
securities & assets; control and non-control private equity; commercial
mid-market lending and real estate-related investments. From its
headquarters in New York City and large network of affiliate and
advisory offices in the US, Europe and Asia, Cerberus has the
on-the-ground presence to invest in multiple sectors, through multiple
investment strategies in countries around the world.
Tender Offer Statement
The tender offer described in this communication has not yet commenced,
and this communication is neither an offer to purchase nor a
solicitation of an offer to sell any shares of the common stock of the
Company. This release is for informational purposes only. On the
commencement date of the tender offer, Symphony Investors LLC will file
a tender offer statement on Schedule TO, including an offer to purchase,
a letter of transmittal and related documents, with the Securities and
Exchange Commission (SEC). At or around the same time, the Company will
file a statement on Schedule 14D-9 with respect to the tender offer.
Shareholders should read those materials carefully because they will
contain important information, including the various terms and
conditions of the tender offer. Shareholders will be able to obtain a
free copy of these documents (when they become available) and other
documents filed by the Company with the SEC at the website maintained by
the SEC at www.sec.gov.
In addition, shareholders will be able to obtain a free copy of these
documents (when they become available) by contacting the Company’s
Investor Relations department at 7075 Flying Cloud Drive, Eden Prairie,
Minnesota 55344, (952) 828-4000.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
Except for the historical and factual information contained herein,
the matters set forth in this news release, particularly those
pertaining to SUPERVALU’s expectations, guidance, or future operating
results, and other statements identified by words such as "estimates,"
"expects," "projects," "plans," and similar expressions are
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially, including
competition, ability to execute initiatives, substantial indebtedness,
impact of economic conditions, labor relations issues, escalating costs
of providing employee benefits, regulatory matters, food and drug safety
issues, self-insurance, legal and administrative proceedings,
information technology, severe weather, natural disasters and adverse
climate changes, the continuing review of goodwill and other intangible
assets, accounting matters and other risk factors relating to our
business or industry as detailed from time to time in SUPERVALU's
reports filed with the SEC. You should not place undue reliance
on these forward-looking statements, which speak only as of the date of
this news release. Unless legally required, SUPERVALU undertakes
no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
Sam K. Duncan
Incoming CEO & President
Sam Duncan, 61, a highly-successful executive with more than 40 years of
retail experience, has been named incoming Chief Executive Officer and
President of SUPERVALU INC., a position he is expected to assume in late
Duncan most recently served from 2005-2011 as Chairman, CEO & President
of OfficeMax, the third-largest office supplies retailer in North
America with over $7 billion in revenues and more than 1,000 stores in
the United States, Mexico, Puerto Rico & the US Virgin Islands. In
addition to retail, Duncan also oversaw the Company’s
business-to-business sales and service divisions in Canada, Australia
and New Zealand.
Prior to joining OfficeMax, Duncan served from 2002-2005 as President
and CEO of ShopKo Stores, a $3 billion Midwest retailer. In both these
leadership roles, Duncan successfully led publicly-traded companies
through growth and financial improvement efforts, resulting in stronger
organizations and improved shareholder value.
Duncan has an extensive background in the grocery industry. He began his
career at Albertsons as a courtesy clerk at the age of 15. During the
next 19 years, he held various positions of increasing responsibility
with Albertsons before moving to Fred Meyer, a division of Kroger, in
1992 as Vice President of Grocery. He was eventually appointed President
of the Fred Meyer division. Duncan also served from 1998-2001 as
President of Ralph’s Supermarket, one of the largest food retailers in
Duncan and his wife of 42 years, Sylvia, reside in Portland, OR. They
have three daughters and five grandchildren.
Robert G. Miller
Incoming Chairman of the Board
Bob Miller has spent more than 50 years in retailing with an impressive
track record of improving the financial and operating performance of
both public and private corporations, as well as leading troubled
companies back to health.
He currently serves as the CEO of Albertson’s LLC, a North American
grocery company with approximately 192 retail grocery and drug stores in
eight states. Retail operations are supported by two major Company
distribution operations. Albertson’s LLC is majority-owned by Cerberus
Capital Management, one of the world’s leading private investment firms
specializing in turning underperforming companies into industry leaders.
Prior to joining Albertson’s in 2006, Miller was Chairman of the Board
of Wild Oats Markets based in Boulder, Colorado from December 2004
In December of 1999, Miller was hired as Chairman and CEO of Rite Aid
Corporation, the country’s third largest drugstore chain, where from
December 1999 to June 2003 he led a successful turnaround of the
nearly-bankrupt company. He continued to serve as Chairman of Rite Aid
until June 2007 and a Director until 2011.
Before joining Rite Aid, Miller was Vice Chairman and Chief Operating
Officer at the Kroger Company, which he joined in May 1999 when the
company acquired the food and drug retailer Fred Meyer, Inc. Mr. Miller
served as Fred Meyer, Inc. Chairman and CEO from 1991 to 1999.
Starting his career at Albertson’s Inc., a retail food and drug chain,
Miller spent 30 years working his way up the ranks from Store Manager to
Executive Vice President of Retail Operations.
He currently also serves on the Board of Directors of Albertson’s LLC,
Nordstrom, Inc, Jim Pattison Group, U.S. Bakery, and Jo-Ann Fabrics and
Crafts. A native of Louisville, Mississippi, he attended Orange Coast
College in Costa Mesa, California and the Executive Management Program
at Stanford University’s Graduate School of Business. He is married with
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20130110005680/en/
Source: SUPERVALU Inc.
Steve Bloomquist, 952-828-4144
Cerberus Capital Management:
Cerberus Media Line, 212-891-1558