Supervalu's stock rebounded 45 percent Monday on reports that a private equity group is cobbling together a deal to buy the embattled supermarket chain.

Reuters reported that Cerberus Capital Management is working on a takeover bid for Eden Prairie-based Supervalu Inc., citing unnamed sources. Also, the Debtwire news service reported that Cerberus is trying to arrange $4 billion to $5 billion in debt financing to back a bid.

Cerberus is a major global private equity group with more than $20 billion under management. It was involved in a 2006 blockbuster supermarket deal involving Supervalu, and is among six private equity groups now backing Best Buy founder Richard Schulze's attempt to acquire his old company.

Supervalu's stock, which has lost more than half its value this year, closed Monday at $3.17, up 98 cents. The company declined to comment on the buyout speculation, which has been going on in some form or another for several weeks. New York-based Cerberus didn't return a call for comment.

Supervalu, one of the nation's largest supermarket operators and owner of Cub Foods, put itself up for sale in July, either as a whole or in pieces. Last week, the company acknowledged it was in "active dialogue with several parties."

A debt analyst at JPMorgan Chase said Monday that there's as much as a "50 percent likelihood" that Supervalu could be sold, a report that might have contributed to the stock's run-up. JPMorgan upgraded its view on Supervalu's credit outlook partly on interest in the firm from potential buyers.

Many equity analysts have said they believe any sale would involve pieces of Supervalu, which has 11 chains, and not the whole company. However, the Reuters and Debtwire reports indicated a Cerberus bid for the whole company.

Jefferies Inc. stock analyst Scott Mushkin wrote in a report Monday that Supervalu is pushing to sell the company as a whole. But he said the effort hasn't been received well by "strategic" buyers, who are more interested in particular Supervalu chains.

Mushkin wrote that Supervalu's best path for its shareholders is to sell its "non-core" assets on the East and West Coasts, as well as its national Save-A-Lot discount chain, shrinking to become a strong regional supermarket wholesaler and retailer.

Supervalu "could then defend markets like Chicago and Minneapolis from a position of strength," he wrote. Chicago, where Supervalu's Jewel chain reigns, is the company's largest single market.

Private equity firms like Cerberus often load up a target company with debt, and then sell off parts to raise cash -- as Supervalu might do anyway.

Supervalu is still debt-laden from a big acquisition in 2006, causing some stock analysts to doubt the feasibility of a major private-equity deal.

But a debt-fueled deal appears doable, according to a report Monday by JPMorgan debt analyst Carla Casella.

Much of Supervalu's old debt is "low cost," she wrote, and therefore wouldn't need to be refinanced. Plus, the supermarket chain has a trove of real estate, which can be used as security to help keep down financing costs.

History with Albertsons deal

Cerberus is familiar with Supervalu's operations. The private equity fund and CVS Corp. were partners along with Supervalu in the $17.4 billion buyout of Albertsons Inc. in 2006.

For its $12.4 billion, Supervalu got Jewel and several other chains -- 1,124 traditional grocery stores altogether, including 569 Albertsons outlets in the western United States.

CVS got about 700 drugstores, and a group led by Cerberus got 655 of Albertsons' underperforming stores. Under Cerberus' ownership, more than 400 of those stores have been sold off.

Mike Hughlett • 612-673-7003