Supervalu to sell Save-A-Lot for $1.36 billion

MINNEAPOLIS — Supervalu on Monday announced that it would be selling its Save-A-Lot business to an affiliate of Toronto-based private equity firm Onex Corp. for $1.365 billion in cash. Supervalu and Save-A-Lot will enter into a five-year professional services agreement to go along with the sale, which is expected to be completed by Jan. 31, 2017. 

 

“Today’s announcement is the result of a thorough process to maximize the value of the Save-A-Lot business and best position Supervalu for future success,” Supervalu non-executive chairman Jerry Storch said “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.”

 

The professional services will see Supervalu providing Save-A-Lot with certain day-to-day operational services and support functions, including cloud services, merchandising technology, payroll and finance services. Supervalu said it expects to use the net proceeds from the Save-A-Lot sale to prepay at least $750 million against its outstanding term loan balance, as well as to reduce its debt and improve its capital structure. The company said it also intends to use it to fund corporate and growth initiatives. 

 

“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,” Supervalu president and CEO Mark Gross said. “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.”