NEW YORK — Billionaire Ronald Burkle and the private-equity firms are looking at parts of Supervalu rather than the whole, said people with knowledge of the matter, who asked not to be named as the process is private. Cerberus Capital Management also has looked at some of Supervalu’s assets, said one person.
Supervalu would prefer a deal for the entire company and has extended its offer deadline past Oct. 15, the people said. The third-largest U.S. grocer may face difficulty because it has almost a dozen different retail banners, some pharmacies and a distribution business, and few bidders would want to keep all of them, two of the people said.
The supermarket chain is weighing a new direction after losing more than $2.5 billion over the past two fiscal years, hurt by competition from discounters and costs to run stores. The market value of Supervalu, led by Chief Executive Officer Wayne Sales since his predecessor’s ouster two months ago, has dropped by more than three-fourths since the end of 2010.
Spartan Stores Inc., a grocery retailer based in Grand Rapids, Mich., has also shown interest in some of Supervalu’s stores in the Midwest, two of the people said. Spartan spokeswoman Jeanne Norcross didn’t return two phone calls seeking comment.
Supervalu disclosed in July that it was working with Goldman Sachs and Greenhill & to review options. The Eden Prairie, Minn.-based company recently allowed parties interested in portions of grocery chain to review the books, signaling Supervalu has become more open to selling off the business in chunks, said two of the people.
TPG Capital director Adam Levine declined to comment, as did Kristi Huller, a spokeswoman for New York-based KKR & Co. An assistant to Burkle didn’t return several phone messages. Burkle, who previously owned chains such as Ralphs and Food 4 Less, helped Great Atlantic & Pacific Tea Co. emerge from bankruptcy earlier this year via his Los Angeles-based investment firm Yucaipa Cos.
In spite of TPG, KKR and Burkle’s interest, Supervalu’s losses and declining sales have stalled progress on any kind of offer, one of the people said. The grocer lost more than $1 billion on $36.1 billion in revenue in the year ended Feb. 25. The parties are in early stages of looking at Supervalu’s assets, three of the people said.
The company has focused on cutting costs, trimming $165 million in expenses last year and planning an additional $325 million in reductions over the next two years. Supervalu named Sales, also chairman of the board, as CEO less than a month after announcing its strategic review.
