Supervalu on Monday sold Save-A-Lot, the discount grocery chain that drove most of its growth in recent years, to a Toronto investment group for $1.37 billion.

Supervalu had been trying to split off or sell the chain of 1,370 stores for about a year. Executives want to use proceeds to reduce debt and shore up the company's full-price grocery chains, such as Cub Foods in the Twin Cities.

The sale of Save-A-Lot to Onex Corp. leaves Supervalu with $13 billion in annual revenue, down from $18 billion, that is dominated by its wholesale business. The company sold off its four largest supermarket chains in 2013.

Though Save-A-Lot played a major role in the growth of Eden Prairie-based Supervalu, it was relatively little known in the Upper Midwest. The chain has a store in St. Cloud and a few in Wisconsin, but most are in the eastern half of the country.

In July 2015, then-CEO Sam Duncan announced that the company planned to spin off Save-A-Lot so it could focus on its other operations and growth. Later in the year, its plans shifted to consider an outright sale.

"Today's announcement is the result of a thorough process to maximize the value of the Save-A-Lot business and best position Supervalu for future success," Jerry Storch, Supervalu's chairman, said in a statement.

Supervalu purchased Save-A-Lot in 1992. It continued to add stores and now attracts more than 5 million shoppers a week.

"A sale allows Supervalu to further deleverage the balance sheet and focus more squarely on its core distribution business," said Vincent Sinisi of Morgan Stanley in an analyst statement.

The company plans to use $750 million of the sale's proceeds to prepay a loan. The remaining amount will be used to further reduce debt and improve capital structure, according to the company's statement.

Supervalu has suffered recently from deflationary food prices, lower traffic and a loss of customers.

"It gives them a lot of flexibility on their balance sheet to invest in the business, pay down debt and buy back stock," said Ajay Jain, senior Research Analyst at Pivotal Research Group in New York.

The sale also includes a professional services agreement in which Supervalu will provide Save-A-Lot with support for day-to-day operations such as cloud services, merchandising technology, payroll, finance, and other services.

David Livingston, a supermarket analyst in suburban Milwaukee, thinks the company received a good price for Save-A-Lot, considering the competitive marketplace for discount grocers.

"Save-A-Lots are the same size as Aldi but with half the sales," he said. "Now that Lidl [another discount supermarket] is coming from Germany, it will be another big competitor."

Jain thought Save-A-Lot could fetch as much as $1.8 billion, but sales in the last four quarters declined between 1.4 percent to 3.4 percent. "We are not entirely surprised that the sale proceeds were lower than expected," he said in a research note.

Chuck Cerankosky, an analyst at Northcoast Research, said Supervalu has a higher debt load than many food retailers and wholesalers. Part of that it is tied to Supervalu's $12 billion acquisition of 566 Albertsons grocery stores in 2006.

The deal turned into a costly mistake, and Supervalu in 2013 sold most of those stores to Cerberus Capital Management, which paid $100 million and took on $3 billion in debt on its balance sheet.

Cerankosky said the Save-A-Lot deal will improve the company's position.

"I think it's a good deal," said. "It's in line with what we expected."

Supervalu shares closed up nearly 6 percent on Monday to $5.30. It has closed as high as about $7 and as low as about $4 in the last 12 months.

Staff writer Mike Hughlett contributed to this report.

John Ewoldt • 612-673-7633