Supervalu has signed an agreement to sell its Save-A-Lot business to Canadian private equity investment firm Onex Corporation for $1.36bn in cash.
In relation with the sale, Supervalu and Save-A-Lot will enter into a five-year professional services agreement.
Go deeper with GlobalData
The sale is scheduled for completion by 31 January next year, subject to regulatory approvals and other customary closing conditions.
Supervalu non-executive chairman of the board Jerry Storch said: “Today’s announcement is the result of a thorough process to maximise the value of the Save-A-Lot business and best position Supervalu for future success.
“Supervalu is successfully executing on its long-term strategic vision and positioning the company for continued growth and value creation. We are confident that this transaction will create exciting opportunities for both Supervalu and Save-A-Lot.”
Supervalu president and CEO Mark Gross said: “The sale of Save-A-Lot is another important step in Supervalu's transformation. It provides us with a stronger balance sheet that will allow us to further build on our core strengths and growth opportunities.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“It has been a pleasure to work with the Save-A-Lot team, and, once this transaction is completed, I look forward to continuing to work with them as one of our largest professional services customers.”
According to the agreement, Supervalu will provide some services to Save-A-Lot and support its day-to-day activities.
The services include cloud services, merchandising technology, finance, payroll, technology and other hosting services.
Supervalu intends to use the net proceeds from the sale to prepay at least $750m against its outstanding term loan balance.
The company will use the remaining net sale proceeds to reduce its debt and improve its capital structure.
It also expects to fund its internal corporate and growth initiatives.
Supervalu has a network of 3,342 stores comprising 1,773 stores operated by wholesale customers serviced primarily by the company’s food distribution business; 1,368 Save-A-Lot stores, of which 896 are operated by licensee owners; and 201 traditional retail grocery stores.
