Thursday, December 6, 2012

Cerberus to take parts of Supervalu Inc. (NYSE:SVU)

Grocery chain SUPERVALU INC. (NYSE:SVU) may finally be approaching a deal to sell its chains such as Albertsons and Save-A-Lot, Bloomberg reported on Thursday citing sources.

The report said that the company would be selling the chains to private equity firm Cerberus Capital Management, since talks on a full takeover of the company have been stalled.

However Bloomberg said that Save-A-Lot has also received interest from parties such as private-equity firm KKR & Co. (KKR). Discussions on a Cerberus bid for the entire company stumbled as lenders balked at the financing terms, it quoted sources as saying.

Cerberus is expected to take control of the Albertsons and Save-A-Lot and also take an equity stake in the remaining portion of Supervalu the report said.

Selling the chains would give Supervalu the cash to pay down some of its more than $6 billion in debt and allow the company to focus on selling or restructuring its nine other chains, it added.

A deal is expected to be finalised by the end of the year, though it was still not clear whether Cerberus would take the company piecemeal or go in for a total takeover.

Supervalu rose 14 percent to $2.90 at the close in New York, the biggest gain since Oct. 22. The shares have lost 64 percent this year.

Supervalu has been struggling to sustain itself for the last three years which has seen sales dip while revenues are set to drop 4.4 percent to $34.5 billion in its fiscal 2013, Bloomberg said.

The grocer, which also owns the Jewel-Osco brand, has recently lowered prices at some of its chains to attract customers and compete with big-box retailers including Wal-Mart Stores Inc. and Target Corp, it added.

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