After months of tensions between activist investor Blackwells Capital and management, SuperValu is nearing a referendum of sorts; the company’s shareholders are expected to elect a new Board of Directors on August 16, 2018. In anticipation of the election, the company sent a letter to its shareholders this week urging investors to vote for “all of SuperValu’s highly qualified Directors” and implicitly to reject Blackwells’ nominees.
“At SuperValu’s upcoming Annual Meeting of Stockholders on August 16, 2018, you will be asked to make important decisions regarding the composition of the Company’s Board and the future structure of your Company, which we believe will impact the value of your investment,” the company noted in its letter. “Blackwells Capital, a New York-based alternative investment firm, is trying to seize control of your Board by proposing to replace six of nine directors. Blackwells’ attempt to seize control of your Company, without paying a premium to all stockholders, is highly disproportionate to its actual ownership stake in SuperValu.”
The letter goes on to state that SuperValu believes Blackwells’ plan to present “significant risk to the important progress the Company is making in executing its ongoing strategic plan.”
“Any claim Blackwells could make to act on behalf of SuperValu's stockholders is belied by the fact that, through short sales of call options and the purchase of put options, Blackwells’ exposure to the Company is substantially less than it represents,” the letter goes on. “In fact, while Blackwells claims that it has a 7.7 percent ownership interest in SuperValu, analysis of the detailed information it has provided in its filings shows that, taking into account its various options contracts, Blackwells’ exposure to the Company’s shares is materially lower than 7.7 percent.”
The company goes on to detail the various ways in which SuperValu “has taken major steps to position SuperValu as the grocery wholesale supplier of choice, while also ensuring that certain of the Company’s well-positioned retail assets are strategically used to add value to the overall business,” achievements including:
The company also urged shareholders to vote for its proposal to restructure SuperValu as a holding company, a step the company said it expects to "enhance [its] competitive position within the changing food industry, strengthen [its] balance sheet, and most importantly, to position the company to deliver long-term value to all stockholders."
To read SuperValu’s letter in its entirety, click here.