According to new information, SuperValu is now considering a complete sale of its Save-A-Lot grocery chain, as opposed to a spin-off of the business as was previously reported.
SuperValu has received interest in Save-A-Lot from several private equity firms, people familiar with the matter disclosed to Reuters. Supervalu will reportedly consider offers after registering the unit with regulators for a spin in early 2016.
Reuters says that while a spin would be more tax-efficient for SuperValu, the sources believe that these private equity firms are hoping to take advantage of a “tax shield” that was put in place from a loss in SuperValu's $3.3 billion sale of supermarket retailer Albertsons Inc. and other stores to Cerberus Capital Management LP in 2013.
SuperValu announced in its July Q1 2015 financial report that it was exploring a spin-off of Save-A-Lot, with CEO Sam Duncan saying that that the company believes a separation of the business could allow the banner to better focus on its operations and “pursue strategies specific to its business characteristics and growth potentials, for the benefit of our shareholders, customers, licensees and employees.”
The sources are now saying that buyout firms would still have to convince the company that their offers would represent better value to SuperValu shareholders compared to a spin, some adding that the business could be valued at more than $1.7 billion.
DeliMarket News will continue to update you on SuperValu’s plans as they’re announced, so stay tuned.