Supervalu, CVS and a Cerberus-led group agree to acquire Albertsons
Supervalu, CVS and a Cerberus-led group agree to acquire Albertsons
Supervalu, CVS and an investment group led by Cerberus Capital Management L.P., including Kimco Realty, Schottenstein Stores Corp., Lubert-Adler Partners and Klaff Realty, announced Jan. 23 that they have reached definitive agreements to acquire Albertson's Inc. for $17.4 billion in cash, stock and debt assumption.
Under the terms of the agreements, Albertsons stockholders will receive $20.35 in cash and a fixed exchange ratio of 0.182 shares of Supervalu stock for each Albertsons share. The value of the Supervalu stock, based on a $32.65 average stock price using the 20-day trading average of the closing price of Supervalu stock through Jan. 20, is $5.94, bringing total consideration per share to $26.29.
The $17.4 billion purchase price assumes the settlement of the Albertsons Hybrid Income Term Security units. The boards of Supervalu, CVS and Albertsons, as well as the investment committees or equivalents of the Cerberus-led group, have approved the transaction.
Supervalu will acquire the operations of Acme Markets, Bristol Farms, Jewel-Osco, Shaw's Supermarkets, Star Markets and Albertsons banner stores in the Intermountain, Northwest and Southern California regions. Supervalu will also acquire the related in-store pharmacies under the Osco and Sav-on banners.
As a result of the acquisition, which totals 1,124 stores, the new Supervalu will become the nation's second-largest supermarket chain. CVS Corp. will acquire approximately 700 stand-alone Sav-On and Osco drugstores in Southern California, the Southwest and Midwest, as well as the distribution center in La Habra, CA.
CVS will also acquire Albertsons ownership interests in the drugstore real estate. The Cerberus-led group will acquire stores in Dallas/Ft Worth, Northern California, Florida, the Rocky Mountains and the Southwest.
The transaction is subject to approval by both Supervalu and Albertsons stockholders as well as customary regulatory approvals. Jeff Noddle, chairman and CEO of Supervalu, will be chairman and CEO of the combined company.
Mr. Noddle said in a statement, "Today we have put in motion a series of actions that will dramatically transform Supervalu. We will realize a sizeable increase in our retail footprint and supply chain network, strengthening our ability to effectively compete in today's challenging grocery industry. The combination of operations will create a premier food retail powerhouse of 2,656 stores from coast to coast, tripling the size of our current retail operations. By adding prestigious supermarket nameplates across the country, each with strong market presence in their respective regions, we will have the critical mass and footprint to leverage the combined operations to become a more profitable business."
He continued: "This acquisition is a strategic fit with S Supervalu 's approach of operating a diversified portfolio of regional banners -- locally managed and branded -- with strong prevailing market shares. We are also, of course, thrilled to join forces with a highly skilled employee base and look forward to building on our combined strengths, cultures and historical roots."
He continued, "We have successfully added retail banners to our portfolio of stores in the past and this gives us confidence that, with the collective leadership of Supervalu and the acquired retail operations, we will achieve the benefits of the combination: a company with better potential for growth and profitability than a stand- alone Supervalu. We believe we have acquired the right assets at the right price. I'd like to thank our partners in this transaction -- both CVS and the Cerberus-led group -- for their role in creating a unique arrangement that will truly benefit all our companies.
"In summary," he added, "for both the Supervalu and Albertsons stockholders, this combination creates a very strong competitor with high market penetrations, tremendous brand equities, significant size and scale and sufficient financial flexibility."
(A more detailed story will appear in the Jan. 30 issue of The Produce News.)
Under the terms of the agreements, Albertsons stockholders will receive $20.35 in cash and a fixed exchange ratio of 0.182 shares of Supervalu stock for each Albertsons share. The value of the Supervalu stock, based on a $32.65 average stock price using the 20-day trading average of the closing price of Supervalu stock through Jan. 20, is $5.94, bringing total consideration per share to $26.29.
The $17.4 billion purchase price assumes the settlement of the Albertsons Hybrid Income Term Security units. The boards of Supervalu, CVS and Albertsons, as well as the investment committees or equivalents of the Cerberus-led group, have approved the transaction.
Supervalu will acquire the operations of Acme Markets, Bristol Farms, Jewel-Osco, Shaw's Supermarkets, Star Markets and Albertsons banner stores in the Intermountain, Northwest and Southern California regions. Supervalu will also acquire the related in-store pharmacies under the Osco and Sav-on banners.
As a result of the acquisition, which totals 1,124 stores, the new Supervalu will become the nation's second-largest supermarket chain. CVS Corp. will acquire approximately 700 stand-alone Sav-On and Osco drugstores in Southern California, the Southwest and Midwest, as well as the distribution center in La Habra, CA.
CVS will also acquire Albertsons ownership interests in the drugstore real estate. The Cerberus-led group will acquire stores in Dallas/Ft Worth, Northern California, Florida, the Rocky Mountains and the Southwest.
The transaction is subject to approval by both Supervalu and Albertsons stockholders as well as customary regulatory approvals. Jeff Noddle, chairman and CEO of Supervalu, will be chairman and CEO of the combined company.
Mr. Noddle said in a statement, "Today we have put in motion a series of actions that will dramatically transform Supervalu. We will realize a sizeable increase in our retail footprint and supply chain network, strengthening our ability to effectively compete in today's challenging grocery industry. The combination of operations will create a premier food retail powerhouse of 2,656 stores from coast to coast, tripling the size of our current retail operations. By adding prestigious supermarket nameplates across the country, each with strong market presence in their respective regions, we will have the critical mass and footprint to leverage the combined operations to become a more profitable business."
He continued: "This acquisition is a strategic fit with S Supervalu 's approach of operating a diversified portfolio of regional banners -- locally managed and branded -- with strong prevailing market shares. We are also, of course, thrilled to join forces with a highly skilled employee base and look forward to building on our combined strengths, cultures and historical roots."
He continued, "We have successfully added retail banners to our portfolio of stores in the past and this gives us confidence that, with the collective leadership of Supervalu and the acquired retail operations, we will achieve the benefits of the combination: a company with better potential for growth and profitability than a stand- alone Supervalu. We believe we have acquired the right assets at the right price. I'd like to thank our partners in this transaction -- both CVS and the Cerberus-led group -- for their role in creating a unique arrangement that will truly benefit all our companies.
"In summary," he added, "for both the Supervalu and Albertsons stockholders, this combination creates a very strong competitor with high market penetrations, tremendous brand equities, significant size and scale and sufficient financial flexibility."
(A more detailed story will appear in the Jan. 30 issue of The Produce News.)
