Albertsons sold to Cerberus Capital Management affiliate

Grocery chain Albertsons will be sold to an affiliate of Cerberus Capital Management in a larger $3.3 billion deal, officials said Thursday.

Minnesota-based Supervalu Inc. said it would sell a total of 877 stores, which includes grocery chains Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores, as well as related in-store pharmacies in the deal.

The deal will reunite the nation’s Albertsons stores under one owner, after the grocery company was sold to three different owners in 2006—Supervalu, Cerberus Capital Management affiliate AB Acquisition and CVS. The Albertsons grocery stores were given to AB Acquisition and Supervalu.

“We are pleased to be making this investment and look forward to helping build long-term value for all stakeholders,” said Lenard Tessler, co-head of Cerberus’ global private equity and senior managing director in a statement. “We believe these transactions will create stronger, more competitive businesses.”

The buyer, Cerberus’ affiliate AB Acquisition, will pay $100 million in cash and $3.2 billion in debt in the deal.

AB Acquisition currently owns 190 Albertsons Market stores and two Super Saver Food stores in eight states, none of which are in California. The deal would increase its store count to 1,069 stores and 12 distribution centers.

Christine Wilcox, a spokeswoman with Albertson's LLC, which is owned by AB Acquisition and will operate those stores, said "everything is business as usual."

"We have no immediate or specific plans to make changes" in terms of jobs, Wilcox said.

AB Acquisition includes Cerberus Capital Management, New Hyde Park, N.Y.-based Kimco Realty Corp., Chicago-based Klaff Realty LP, Philadelphia-based real estate investment company Lubert-Adler Partners and Columbus, Ohio-based Schottenstein Real Estate Group.

In addition to the deal, there will be other changes at Supervalu. Cerberus will lead another investor group called Symphony Investors that will offer to purchase up to 30 percent of Supervalu’s stock at $4 a share in cash. Symphony must get at least 19.9 percent of the common stock shares in the offer, or Supervalu will need to sell it new shares so it can receive that ownership amount.

Both the deal and the stock purchases are expected to close in the first quarter and do not need shareholder approval.

There will also be leadership changes at Supervalu.  After the sale, Supervalu will be led by Sam Duncan, former CEO of OfficeMax and a grocery retail veteran. Current CEO Wayne Sales will resign.

Five of Supervalu’s directors will resign and its board will be reduced to seven members. Five Supervalu directors will remain and two new board members named by Symphony Investors will be added. One of the new members is Robert Miller, head of AB Acquisitions’ Albertsons LLC.

Supervalu said the board will be eventually expanded to 11 directors, which will include the 7 directors listed above, an additional board member named by Symphony, new CEO Sam Duncan and two more members chosen by the board.

Supervalu stock was selling at $3.40 a share, up 36 cents on the New York Stock Exchange.