Supervalu Sells Save-A-Lot Chain for $1.4 Billion
Supervalu said Monday that it has sold Save-A-Lot, its discount supermarket chain, to Onex Corp., a Toronto investment group, for $1.37 billion. Supervalu has been trying sell the chain of 1,368 stores for about a year. The move leaves Supervalu as primarily a food wholesaler with a division of grocery stores that operate under various names in different cities. Supervalu plans to use $750 million of the sale’s proceeds to pre-pay a term loan. The remaining amount will be used to further reduce debt and improve capital.
Total Retail's Take: It looks like the sale of Save-A-Lot will bring financial relief for Supervalu. The company has been trying for more than a year to unload Save-A-Lot. Supervalu has suffered recently from deflationary food prices, lower traffic and a loss of customers. The sale of Save-A-Lot allows the company to improve profit margins as its higher-margin wholesale business will become a greater portion of its overall financial mix. Save-A-Lot is an attractive asset in its own right. It's one of the country’s largest discount grocery chains, reaching more than 5 million shoppers a week, and was one of Supervalu’s fastest-growing divisions.