Supervalu on Monday said that it has finalized the sale of its Save-A-Lot business to an affiliate of Onex Corp. for $1.365 billion in cash, subject to customary closing adjustments. With the sale of Save-A-Lot, Supervalu said it is now a more focused company. In connection with the closing of the sale, Supervalu and Save-A-Lot have entered into a five-year professional services agreement pursuant to which Supervalu will continue providing certain back office services to Save-A-Lot.
“With the successful completion of the Save-A-Lot sale, we are well positioned for the future with a stronger balance sheet, the opportunity to more strategically invest in our business, and the ability to more keenly focus on our core business as a leading grocery wholesaler,” said Supervalu President and CEO Mark Gross. “We also look forward to continuing our relationship with Save-A-Lot as one of our important professional services customers.”
Supervalu also said Monday that it has used $750 million of the net proceeds from the sale to prepay that portion of its outstanding term loan balance. The company intends to use the remaining net sale proceeds to further reduce debt and improve its capital structure, contribute to its pension plan, as well as to fund corporate and growth initiatives.
Following Monday’s closing Supervalu is now organized into two primary business segments: Wholesale and Retail.
Supervalu operates a network of 2,012 stores composed of 1,815 stores operated by wholesale customers serviced primarily by the company’s food distribution business and 197 traditional retail grocery stores operated under five retail banners. In addition, the Eden Prairie, Minnesota-based company operates 22 stores under the Shop ‘N Save name in Maryland, Pennsylvania, Virginia and West Virginia.