Supervalu, which failed to turn around Albertsons, is acquired. What it means to Idaho

Supervalu is no more, at least as an independent company.

The Minnesota grocery wholesaler and retailer — which bought most of the old Albertsons Inc. supermarkets when the chain broke up in 2006 and ran them for the next seven years — was bought last week by a Rhode Island company, United Natural Foods Inc.

If you were a Supervalu shareholder — as many former Albertsons Inc. employees and other shareholders in Idaho became when Albertsons Inc. ended — you aren’t any longer. United Natural Foods agreed to buy your shares for $32.50 each. Supervalu stock stopped trading on Monday on the New York Stock Exchange.

It was not clear whether any jobs in Boise would be affected. Supervalu and Albertsons shared certain services for years using Boise employees, but those gradually wound down, and an Albertsons spokeswoman could not say what impact the UNFI purchase may have locally. Calls and an email to a Supervalu spokesman were not returned. A message left Friday for a UNFI investor-relations executive was not immediately returned.

Supervalu’s 2006 purchase included 1,100 stores, including most of Albertsons Inc.’s store banners nationwide but fewer than half of the Albertsons-branded ones. Supervalu bought only the Albertsons-brand stores in regions Supervalu felt had the greatest potential, including California and the Northwest.

The purchase brought sadness to Idaho, because Albertsons, founded by Joe Albertson in 1939 with a single grocery store at 16th and State streets, had become one of Boise’s iconic businesses.

But the chain had floundered for years as sales weakened and black ink turned to red. Albertsons Inc. cut more than $1 billion in costs, laid off nearly 1,300 employees, remodeled stores and abandoned underperforming markets before its board finally decided in 2005 to give up and sell the company.

The sale brought bitterness to Boise, too, when Albertsons Inc.’s last CEO, Larry Johnston, escaped with a golden parachute estimated at more than $100 million.

Supervalu’s purchase raised hopes that the Albertsons would again prosper. But Supervalu quickly shed 400 corporate jobs in Boise as it shifted their work to Minnesota. And as the years passed, Supervalu struggled, just as Albertsons Inc. had. Traditional grocers nationwide were squeezed by competitors at the low and high ends.

The debt Supervalu took on to pay for the purchase weighed heavily on corporate finances. Supervalu closed more stores. And Supervalu, too, finally gave up. In 2013, it sold all of its remaining Albertsons Inc. stores to the company that bought the Albertsons-brand stores Supervalu had rejected in 2006. The buyer, Albertsons LLC, got them for $3.3 billion, one-fourth what Supervalu paid in 2006.

Through it all, Supervalu continued Albertsons’ contributions to the Treasure Valley, including support for the Albertsons Boise Open golf tournament each year. And it kept all of the Idaho Albertsons stores open.

Albertsons LLC was created by an investment consortium led by a New York private-equity firm, Cerberus Capital Management. Albertsons LLC operated quietly in Boise during the Supervalu years, sharing part of the old Albertsons Inc. headquarters on Parkcenter Boulevard with Supervalu.

There were two Albertsons chains from 2006 to 2013: Albertsons LLC’s stores in the South and Southwest, which were run from Boise; and Supervalu’s Albertsons in Idaho and elsewhere, which were run from Minnesota. The 2013 deal reunited them.

The post-Supervalu years have been dominated by the re-emergence of Albertsons — now named Albertsons Companies Inc. — as a high-profile Boise business. Albertsons bought the larger Safeway chain in 2015. Lately it has been building new Treasure Valley stores, including a new, upscale one that opened this year on Broadway Avenue in Boise. It employs more than 4,000 Idahoans, making it the state’s seventh-largest private-sector employer. It is the biggest company based in Idaho, with 265,000 workers nationwide.

But the challenges facing traditional grocers remain. Plans to return Albertsons to public ownership have stalled. Albertsons failed to pull off a merger this year with the Rite Aid drug-store chain. And the company is still losing money, thanks to payments it must make on billions of dollars in debt the investment consortium made the company take on to pay for the 2013 and 2015 takeovers. Without that, Albertsons would be consistently profitable.

Supervalu shareholders approved the United Natural Foods takeover. UNFI plans to shed Supervalu’s remaining retail stores and focus on Supervalu’s original, pre-Albertsons mission: grocery wholesaling. UNFI says Supervalu will live on as a UNFI corporate unit.

In a news release, Steve Spinner, UNFI’s chairman and CEO, said: “We will take the best from both businesses to create North America’s premier food wholesaler with significant scale, reach and choices for our customers.”

This story was originally published October 26, 2018 at 4:19 PM.