United Natural Foods Inc. closed its $2.9 billion purchase of Supervalu Inc. on Monday, with Supervalu shares disappearing from the New York Stock Exchange as the first sign of the completed takeover.
Supervalu off stock market for first time since 1967 as United Natural Foods completes $2.9 billion deal
New owners seek buyers for grocery chains, including Cub Foods.
October 23, 2018 at 12:42AM
In coming months, United Natural aims to sell Supervalu's grocery store chains, including Cub Foods, and narrow its business to wholesale distribution similar to its own.
United Natural Foods (UNFI), based in Providence, R.I., is the nation's largest distributor of organic and natural foods. With Supervalu, the company will more than double its size and expand its reach into traditional foods and grocery stores.
Sean Griffin, the chief operating officer at UNFI who had planned earlier this year to retire, will act as chief executive of Supervalu and lead the committee of executives that are integrating the two companies.
Two senior Supervalu executives — Anne Dament, who led retail and private brands, and Mike Stigers, who led the wholesale business — will report to Griffin.
Supervalu shareholders approved the sale of the Eden Prairie-based company, which was announced in late July, in a special vote last Thursday. More than 80 percent of votes at the meeting supported the sale.
The company grew from the merger of a pair of food wholesalers that became the Winston & Newell Co. in Minneapolis in the 1920s. In the 1940s, it formed a virtual chain of independently run groceries that took the name SuperValu with a capital "V," a name it adopted in 1952. The corporate name changed to a lowercase "v" in the early 1990s.
In 2006, Supervalu borrowed heavily to finance the $12 billion purchase of more than 1,100 stores of Albertsons Inc., which was the nation's second-largest chain of grocery stores at the time. But when recession came in 2008 and 2009, Supervalu had more than $6 billion in debt from that deal and little room to adapt as competition grew from discount chains and online shopping.
Supervalu sold the Albertsons chain in 2013 and has sold off most of its other retail operations in the years since, aiming to narrow its scope to wholesale distribution, which delivered more profits, and lower its debt.
Supervalu over the past year faced pressure from an activist shareholder to accelerate its exit from grocery retailing.
United Natural Foods executives have said they are looking for buyers for the Cub chain, which has 81 locations mainly in Minnesota, as well as Supervalu's eight-unit Hornbacher's chain in the Fargo-Moorhead market, 52-store Shoppers chain in Washington-Baltimore and the Shop 'n Save and Farm Fresh chains in the St. Louis area and mid-Atlantic states.
With the formal closing of the deal, Supervalu shares did not open for trading on the NYSE, where the company has been listed since 1967.
United Natural Foods paid Supervalu shareholders $32.50 a share, about twice the value the shares have traded at over the past year.
Of the $2.9 billion value of the deal, $1.6 billion was Supervalu debt that United Natural Foods assumed and is paying off with new financing.
Evan Ramstad • 612-673-4241
The funding is expected to give more than 5,000 Minnesotans, especially in rural areas, high-speed broadband access across the state and help at least 139 businesses and 368 farms.
