retail news in context, analysis with attitude

The Wall Street Journal reports that troubled Supervalu is expected to send out financial information to a wide range of potential buyers , including C&S Wholesale Grocers, which could be interested in acquiring its distribution business, and a number of private equity firms such as Cerberus Capital Management, Kohlberg Kravis Roberts, and TPG Capital.

As previously reported, after a quarter in which Supervalu reached neither its sales or earnings goals, and a long and difficult road stretching in front of it before any sort of sustainable positioning could be achieved, the company said it would look into selling all or some of its assets.

According to the story, C&S "is interested in buying Supervalu's distribution operations, people familiar with the matter said. C&S distributes groceries to around 3,900 stores around the country, according to the Keene, N.H., company's website. Run as a family business, C&S could look to partner up with a buyout firm to bid jointly for Supervalu and then separate the assets, the people added.

"According to the people familiar with the matter, buyout firms could be interested in Supervalu's retail store brands, which include Albertsons, Shaw's, Acme, Jewel-Osco and Save-A-Lot. The Save-A-Lot discount chain brings in steady cash flow and, with 1,332 stores in cities such as Detroit and Tampa, could be especially attractive to private equity, the people said."

The story goes on to say that "some Wall Street analysts have said Supervalu's debt load of more than $6 billion and operating struggles make a sale of the whole company difficult. The company also had about $1.7 billion of unfunded pension liabilities on a pre-tax basis at the end of its fiscal year in April - a burden that could limit what potential buyers are willing to pay for Supervalu, said the people familiar with the matter."
KC's View:
The big question may be whether anybody is willing to pay what Supervalu is going to want in terms of a check for all or part of the company. It is fairly well know that Supervalu tried to sell Shaws, its New England retail banner, several years ago but could not get the price it wanted.

Right now, when it comes to Supervalu's assets, it seems safe to say that it is a buyer's market, not a seller's, and that Supervalu has diminishing leverage in the marketplace.

Other than that, I would refer you to the emails on the subject in "Your Views," below.