The deal ends months of speculation on Wall Street that the struggling Supervalu would sell some or all of its assets.
Jewel-Osco stores will be sold to a group of investors led by New York investment firm Cerberus Capital Management, according to an article in the Chicago Tribune.
The deal, confirmed by Jewel’s parent Supervalu on Jan. 10, is worth $3.3 billion and also includes the Albertsons, Acme, and Shaw stores. It is expected to close in the next 10 days.
As part of the deal, which includes $100 million in cash and $3.2 billion in debt, the five grocery chains will be acquired by AB Acquisition, an affiliate of Cerberus, according to the Tribune report. Other investors include Kimco Realty Corp, Klaff Realty, Lubert-Adler Partners and Schottenstein Real Estate Group. Upon completion of the deal, Supervalu will consist of its wholesale grocery business, the Save-A-Lot discount chain, and traditional supermarket chains including Cub, Shop N' Save and Hornbacher's.
Supervalu also announced that it has secured access to a $900 million asset-based credit facility, and a $1.5 billion loan.
Sam Duncan, former chief executive officer of Office Max, will replace Wayne Sales as CEO. Five unnamed board members will resign as part of the deal, making room for Duncan, Albertsons CEO Robert Miller, and three new appointees.
This deal ends months of speculation on Wall Street that Supervalu would sell some or all of its assets. Supervalu acquired Jewel in 2006 as part of a larger acquisition of the Albertsons company. Before that, the company had been primarily a wholesale business, although the Albertsons deal sharply increased its retail business and loaded the company with debt.
Struggling to compete against low-cost competitors or make investments to improve stores and compete with higher-end stores, the company struggled to regain footing. Last April, Supervalu reported a loss of $1.04 billion for fiscal 2012, with sales declining 3 percent, to $27.9 billion. In July, the company announced it was exploring a possible sale, discharging CEO Craig Herkert shortly thereafter.