FILE - This June 12, 2012 file photo shows a Kroger store in Indianapolis. The Kroger Co. announced Thursday, March 7, 2013 that its fourth-quarter profit in 2012 handily beat Wall Street expectations. (AP Photo/Michael Conroy, File)
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FILE - This June 12, 2012 file photo shows a Kroger store in Indianapolis. The Kroger Co. announced Thursday, March 7, 2013 that its fourth-quarter profit in 2012 handily beat Wall Street expectations. (AP Photo/Michael Conroy, File)
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FILE- In this Thursday, April 26, 2012, file photo, a Safeway online shopping advertisement is shown at a Safeway store in San Francisco. Grocery store operator Safeway said Thursday, Feb. 21, 2013, its customer loyalty program helped its fourth-quarter net income jump 13 percent in the fourth quarter, far surpassing expectations. (AP Photo/Paul Sakuma, File)
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This March 1, 2011 photo shows a customer walking down the bread and pastry aisle at a Kroger Co. supermarket. The Kroger Co. reported a second-quarter profit that beat Wall Street expectations, Friday, Sept. 7, 2012, as the supermarket operator said its loyalty program helped lift a key sales figure. The nation's largest traditional grocery store chain also raised its outlook for the year. (AP Photo/Al Behrman)
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This screen grab provided by Target shows an advertisement from the company featuring a model interacting with baking products. Target is pushing its food, laundry detergent and other groceries in a national ad campaign that pokes fun at high-fashion advertising by featuring models interacting with everyday products. (AP Photo/Target)
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In this July 28, 2012 photo, shopping carts sit parked outside a Target store in Marlborough, Mass. Target is reporting that net income for the second quarter was unchanged, as the retailer gets ready for its upcoming move into Canada. But the retailer saw solid spending in the quarter and in a sign of confidence, the cheap chic discounter raised its earnings outlook. Target posted earnings Wednesday, Aug. 15, 2012 of $704 million, or $1.06 per share in the period ended July 30. That compares with $704 million or $1.03 per share, in the year ago period. (AP Photo/Bill Sikes)
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Ten shares fell after the struggling broadcaster completed part of a $230 million capital raising.
Supervalu rises as it closes on sale of 5 chains
NEW YORK (
AP) —
Supervalu's stock rose more than 11 percent on Thursday as the supermarket operator announced that it completed the sale of five of its grocery chains.
THE SPARK: Supervalu said Thursday that it completed the sale and that operations for the grocery stores involved in the transaction would be transferred overnight.
THE BACKGROUND: Supervalu announced in January that it was selling Albertson's, Jewel-Osco, Acme, Shaw's and Star Market to an investor group led by Cerberus Capital Management. Supervalu said at the time that after the sale it would focus on its Save-A-Lot discount stores, as well as its smaller regional chains Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's. It will also keep its wholesale business that distributes groceries to stores.
Supervalu has struggled for years to turn around its business. The broader supermarket industry has been facing growing competition from big-box retailers such as Target, drugstore chains and dollar stores. While bigger chains such as Kroger Co. have adapted by tweaking store formats and improving discount programs and product offerings, Supervalu has scrambled to keep pace.
As part of the deal, the investor group agreed to pay $100 million in cash for the stores, and assume $3.2 billion in existing debt. Cerberus also offered to buy up to 30 percent of what's left of Supervalu for $4 per share after the deal closed.
THE ANALYSIS: Ajay Jain of Cantor Fitzgerald said in a client note that the sale ends "a long period of value destruction" at Supervalu. The analyst said that the transaction gives the Cerberus group full ownership of Albertson's. It already owned about 200 Albertson's in the South and Southwest before the deal. Jain said he expects the group to take a very real estate focused approach to Albertson's.
He maintained a "Buy" rating and a $6 price target.
SHARE ACTION: Shares of Supervalu Inc. added 34 cents, or 8.2 percent, to $4.53 in afternoon trading. The stock has traded in a range of $1.68 to $6.78 over the last year. For the year to date, the shares are up 70 percent.
Tags:
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