Cerberus Seen As Acquiring Stake In SVU; Albertsons Banner May Be Part Of LLC

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Despite some recent setbacks, the Cerberus-Supervalu potential marriage is still very much on, several Wall Street sources have told Food Trade News.

While we had heard predictions that a deal between the struggling retailer/wholesaler and the well-endowed New York venture capital firm might happen before Thanksgiving, it now looks like it will be early January before there’s a possible announcement. And we’ve learned that such a deal will take a slightly different form than originally anticipated.

Instead of Cerberus acquiring all the assets of the Eden Prairie, MN organization, it now appears (according to several sources) that Cerberus will acquire the Albertsons stores in its Southern California (226 units in California and Nevada) and Intermountain divisions (187 units in Oregon, Washington, Wyoming, Montana, Utah, North Dakota and Idaho). Those units would then be rolled into Albertsons LLC, which Cerberus has controlled since the 2006 sell-off of the entire Albertsons organization by then CEO Larry “The Milkman” Johnston.

Boise, ID (the home of the original Albertsons) will remain headquarters for Albertsons Markets LLC. We’re told that Bob Miller, CEO, will become chairman of the new organization and Bob Butler, currently executive VP-operations, will assume the chief executive post. If a deal for Supervalu’s Albertsons banner is concluded, Albertson Markets LLC will add 213 units to its current base of 192 stores that are located in Texas, Arizona, Florida, New Mexico, Louisiana, Arkansas and Colorado.

The change in direction is a result of how Cerberus now plans to deal with the remainder of Supervalu. We’re told that instead of a total asset sale, Cerberus would now own a substantial, but minority stake in SVU (perhaps 25-40 percent).

The common link in all of this is Bob Miller, who originally worked for Joe Albertson in the 1960s and subsequently held senior management positions with Fred Meyer (with Ron Burkle’s Yucaipa Cos.), Wild Oats and Rite Aid, before returning to head the Albertsons bannered stores that Supervalu did not acquire in that historic 2006 deal.

We’re told that Miller would likely become chairman of Supervalu (therefore having a Cerberus link in both organizations). Sam Duncan, who like Bob Butler, worked with Miller at Fred Meyer, would become CEO of Supervalu.

If such a deal does occur, Cerberus likely would get at least three SVU board seats, too, sources revealed. While this structure is different than the reported original plan, it still would give Cerberus the control it needs to make future moves.