We noticed that Supervalu (SVU) saw a bump in its share price on Friday August 24th due to reports from Bloomberg that SVU’s advisers are asking potential buyers to tender bids for the entire company even though suitors have inquired about individual parts of the grocery company. We believe that SVU should certainly not rule out bids for individual grocery store chains because we believe that SVU would be more likely to realize greater value by selling off the individual chains rather than trying to sell off the whole enterprise.
We believe that what led investors to get excited from that article was the fact that Cerberus Capital Management LP is examining a possible deal involving SVU’s New Albertsons Inc operations. We think that would be a good deal since Cerberus already took over the Albertsons stores in the Southwestern US and renamed it Albertsons LLC. SVU is allowing Cerberus to use the Albertsons name for Albertsons LLC under a licensing agreement.
Koninklijke Ahold NV (AHONY.PK) is the parent of the Boston area supermarket chain Stop & Shop and Giant Food Stores LLC in the Washington, DC area and there was speculation that Ahold was interested in acquiring SVU’s Shoppers Food and Pharmacy and merging it under the Giant Food banner.
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