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Could SuperValu Be Retail's Next Big Acquisition Target?

Could SuperValu Be Retail's Next Big Acquisition Target?

Wednesday, March 29th, 2017

If you're familiar with the reail industry, you've probably heard tale that mergers and acquisitions have an inevitable domino effect. The past few years have been ripe with big retail moves: Albertsons and Safeway, Walmart and Jet, and SpartanNash and Caito, to name a few. But now, according to a report by Bloomberg’s Gillian Tan, SuperValu may be next in line as a target for acquisition.

On the heels of the company’s December sale of its Save-A-Lot grocery chain to Canadian private equity firm Onex Corp., the retailer may now have enough capital to both pay down debt and focus on its wholesale-distribution business, Tan explained, adding that analysts now track SuperValu’s fiscal 2018 revenue to grow by as much as $1 billion—more than 10 percent. 

Despite this positive outlook, SuperValu’s shares have generally fallen over the past fiscal year—more than 30 percent, likely in response to increasing retail competition and food price deflation.

Credited to Google Finance

As analysts look towards the year ahead, many predict the company’s shares gaining more than 50 percent over the next 12 months. And, as Bloomberg puts it, potential merger partners could capitalize on this disconnect

So, who are some of SuperValu’s possible industry suitors? 

One retailer that keeps coming up during discussions is Grand Rapids, Michigan-based SpartanNash. On the heels of its $218 million Caito Foods acquisition, SpartanNash could potentially make an all-stock transaction at a 50 percent premium—making for an immediately accretive deal, Bloomberg suggests.

Another possible buyer could be United Natural Foods Inc. (UNFI). The company has made several high profile acquisitions as of late, including Haddon House Food Products, Inc., Global Organic/Specialty Source, Inc., Nor-Cal Produce, Inc., and Gourmet Guru, Inc. Bloomberg suggests that UNFI could theoretically take an all-stock merger at a generous premium, which would also boost its earnings. 

Will either of these potential buyers be able to court SuperValu before it finds its footing? Deli Market News will continue to provide you with the lates updates.