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A SuperValu store at 970 MN-23 in Paynesville, MN (pictured, above) and the Northtown Mall Cub Foods store at 585 NE Northtown Dr. in Blaine, MN.
United Natural Foods Inc., an organic food supplier to Amazon’s Whole Foods Market grocery chain, plans to buy SuperValu in a $3 billion deal that will result in the sale of its 2 million-square-foot U.S. retail operation.
SuperValu, based in Eden Prairie, MN, is one of the largest U.S. grocery store chains, with 23,000 employees between its main business, grocery wholesaling and its distribution operation. United National Foods said it plans to sell Supervalu’s retail operation, made up of four traditional chains: Hornbacher’s, Shop ‘N Save, Shoppers and Cub Foods. Its Cub Foods is the dominant grocer in its home region of Minneapolis-St. Paul.
Supervalu’s distribution network and real estate holdings are national in scope, though in recent months the company has sold off assets in an effort to raise cash and appease activist investors. As of Dec. 31, 2017, it owned 17 million square feet of industrial space, about 2 million square feet of retail and 345,000 square feet of office space at its headquarters.
United Natural Foods, which distributes across the U.S. and Canada, said buying Supervalu would give the company access to more customers, new markets and greater scale.
United Natural Foods will pay $32.50 a share and assume its outstanding debt, making the total deal valued at $3 billion, the companies said. United Natural Foods will finance the deal by taking on debt, with a loan from investment bank Goldman Sachs.
Once Supervalu is in the fold, the combined company will be led by United Natural Foods Chairman and Chief Executive Steven Spinner.
Though the transaction has passed muster with the boards at both United Natural Foods and Supervalu, there are several hurdles to clear before the deal can close. Supervalu shareholders have yet to weigh in on the matter, and the transaction will be subject to antitrust approvals.
If the companies gain approvals, the transaction is expected to close in the fourth quarter of 2018.
