MINNEAPOLIS – SUPERVALU Inc. announced today a definitive agreement to sell its Save-A-Lot business to an affiliate of Onex Corp. for $1.365 billion in cash. Customary closing adjustments will apply to the acquisition. SUPERVALU and Save-A-Lot will enter into a five-year professional services agreement in connection with the sale. Completion is expected by Jan. 31, 2017, and is subject to regulatory approvals and customary closing conditions.
The terms of the professional services agreement include SUPERVALU providing Save-A-Lot with certain services and support for day-to-day operations such as cloud services, merchandising technology, payroll, finance, and other technology and hosting services.
“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,” said SUPERVALU non-executive chairman of the board, Jerry Storch in a statement. “SUPERVALU is successfully executing on its long term strategic vision and positioning the company for continued growth and value creation. We are confident that this transaction will create exciting opportunities for both SUPERVALU and Save-A-Lot.”
SUPERVALU plans to use proceeds from the sale to prepay $750 million or more against its outstanding term loan balance. It will use the remaining proceeds to further reduce debt, improve its capital structure and fund corporate and growth initiatives.
“The sale of Save-A-Lot is another important step in SUPERVALU’s transformation. It provides us with a stronger balance sheet that will allow us to further build on our core strengths and growth opportunities,” said SUPERVALU president and CEO, Mark Gross. “It has been a pleasure to work with the Save-A-Lot team, and, once this transaction is completed, I look forward to continuing to work with them as one of our largest professional services customers.”