Supervalu could jettison Albertsons, Save-A-Lot chains

Supervalu Inc. is reportedly moving toward selling its two largest chains to Cerberus Capital Management after a deal for the entire company stalled.

Eden Prairie-based Supervalu, which owns Cub Foods in the Twin Cities, is considering selling its Albertsons and Save-A-Lot chains to Cerberus, Bloomberg News reported Wednesday, citing unnamed sources.

Supervalu declined to comment, except to say it "continues in active [sales] discussion with several parties."

Supervalu's stock closed Wednesday at $2.90, up 35 cents, almost 14 percent. The stock has fluctuated between about $2.20 and $3.20 since late October on speculative news reports about deals coming together or falling apart.

The Albertsons unit is big in the western part of the United States, particularly Southern California, the Las Vegas area and Idaho. However, Supervalu in June announced it was cutting as many as 2,500 jobs, or up to 13 percent, of Albertsons' workforce in Southern California and Nevada.

Supervalu and Cerberus teamed up in 2006 in the $17.4 billion purchase of Albertsons, a multichain company that included the flagship Albertsons brand.

For $12.4 billion, Supervalu got 1,124 traditional grocery stores under several banners across the United States, including 569 Albertsons. Cerberus got 655 underperforming Albertsons stores, of which it subsequently sold off more than 400.

Save-A-Lot is considered one of Supervalu's most valuable assets, and one of its most marketable. Bloomberg has reported that buyout group KKR & Co. and others have also expressed interest in Save-A-Lot.

Supervalu put itself up for sale as a whole or in parts in July after several quarters of falling sales and market share, along with a rapidly declining stock. Stock analysts have expected the grocery giant, which has 11 chains, would be sold in pieces.

But in October, speculation began to center on a bid for the whole company by Cerberus, a large private equity group. It now appears financing for a full sale of Supervalu to Cerberus is on the rocks, according to reports citing unnamed sources.

Mike Hughlett • 612-673-7003