Cerberus Capital Seen As Front Runner In Effort To Acquire Supervalu Assets

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As the process to sell Supervalu continues to unfold, multiple sources have pointed to Cerberus Capital Management, LP as being the front runner to acquire all of Supervalu’s assets.

When the Eden Prairie, MN retailer/wholesaler first announced in July that it had hired Goldman Sachs and Greenhill & Co. to perform an asset review of the troubled firm, many industry observers wondered if Supervalu was saleable in one piece.

And in an October 2 story, Bloomberg reported that not only was Cerberus interested but so were other private equity firms Yucaipa, KKR and TPG Capital. However, the story added that those three investment firms were looking to acquire only pieces of Supervalu, not the entire corporate entity.

Several sources noted that they believe that Cerberus will be the only player willing to step up to the plate and acquire all of Supervalu’s assets, although one source believed that a deal could be announced with Cerberus as the lead player with additional organizations interested in specific pieces of SVU’s operation.

“First off, there has been a solid relationship between Supervalu and Cerberus (in 2006 Cerberus acquired 655 stores as part of the sale of Albertsons) and they continue to license the Albertsons name from Supervalu,” saidone Wall Streetanalyst. “I think Cerberus would have a keen interest in Supervalu’s Southern California and Intermountain (Washington, Oregon, Idaho) operations. Additionally, by selling the entire company (rather than in pieces), Supervalu could potentially escape future debt (currently at $6 billion) and pension fund obligations.”

If Cerberus did acquire all of Supervalu, another Wall Street analyst suggested that it could follow its Albertsons LLC strategy of selling stores in markets that were not a fit for the retailer (i.e. Northern California, where it sold 132 stores to Save Mart) or closing or selling stores in existing markets where it faces tough competition (i.e. Florida, where it has sold many of its stores to Publix and now only operates four units). Of those original 655 stores, there are now only 190 stores remaining, which trade as Albertsons Market.