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Jewel-Osco sold as part of $3.3 billion deal

The Jewel-Osco Store State Roosevelt after SuperValu announced thit’s selling Jewel-Osco four other grocery stores AB Acquisititransactivalued $3.3 billiThursday Jan.

The Jewel-Osco Store at State and Roosevelt after SuperValu announced that it’s selling Jewel-Osco and four other grocery stores to AB Acquisition in a transaction valued at $3.3 billion, Thursday, Jan. 10, 2013. | John H. White~Sun-Times

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Updated: February 12, 2013 2:41PM



Supervalu announced Thursday that it’s selling Jewel-Osco and four other grocery store chains to AB Acquisition in a transaction valued at $3.3 billion.

The sale — which involves 877 stores — also includes Albertsons, Acme, Shaw’s and Star Market stores and related Osco and Sav-on in-store pharmacies.

AB Acquisition LLC is an affiliate of an investor consortium led by Cerberus Capital Management.

The group will acquire the stores for $100 million in cash, and the new company will assume $3.2 billion in existing debt.

After the sale of Jewel-Osco and the other chains, Supervalu will consist of a food wholesaler, regional chains Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s and discount chain Save-A-Lot.

Supervalu said grocery retail veteran Sam Duncan will replace CEO and Chairman Wayne Sales after the sale.

In a conference with analysts, Sales said the sale positions Jewel-Osco and the other chains “with the best opportunity for future success,” enabling the new owners to quickly implement turnaround programs.

As for the remaining Supervalu operation, he said the deal will leave it with a very strong balance sheet enabling it to immediately invest in price, freshness and the customer experience, while bringing “to the party a very strong and experienced retail food leadership team. They have a very clear strategic plan to begin to implement changes immediately in the organization.”

Supervalu, based in Eden Prairie, Minn., announced in July that it was looking at its strategic options, including putting itself up for sale. The company has also suspended its dividend, closed stores, cut staff and replaced its CEO in the past year.

The Jewel operation covers more than 170 stores in the Chicago area and is regarded as one of the company’s stronger pieces. Supervalu bought Jewel in 2006 as part of a buyout of the Albertson’s chain, which saddled the company with $6.3 billion in debt while binding it to a business in decline.

Supervalu has struggled for a number of years to turn around its business. It was an industry laggard prior to the recession and was getting a revamp ready when the economy crumbled. It has been unable to keep up with the intense competition of other grocers, big box store and discount retailers.

In September, Supervalu said it would close 60 underperforming stores. The closures included Albertsons, ACME and Save-A-Lot stores in various states. Supervalu did not announce any closures in the Chicago area.

On Thursday, Supervalu also reported fiscal third-quarter profit of $16 million, or 8 cents per share, including a $26 million after-tax gain related to a cash settlement received from credit card companies. Excluding special items, the company earned $5 million, or 3 cents per share. In the third quarter of fiscal 2012, the company reported a net loss of $750 million, or $3.54 per share.

Net sales in its latest fiscal quarter fell 4.8 percent to $7.9 billion from $8.3 billion. Retail food net sales were $4.96 billion, down 7.4 percent from $5.36 billion a year earlier.

Contributing: Associated Press



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