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Investor group reunites Albertsons stores

A $3.3 billion deal will bring ownership of Albertsons stores back to one company.

Minnesota-based Supervalu Inc. announced a deal Jan. 10 to sell its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores to a group of investors led by Cerberus Capital Management L.P., a private investment company. Cerberus is headquartered in New York City and manages more than $20 billion in assets.

The proposed transaction involves creation of a new subsidiary called New Albertsons Inc. (NAI) and an exchange of cash and debt. The NAI subsidiary includes Albertsons and the four other Supervalu brands. Supervalu will sell NAI to Cerberus investors for $100 million. Cerberus will also assume $3.2 billion in debt once it acquires NAI.

The agreement is expected to close in mid-March.

According to Supervalu spokesman Mike Siemienas, operations at Supervalu’s Albertsons stores will not be affected until the sale closes. He said Albertsons employs 13,000 people in its Intermountain West region.

Cerberus already owns Albertsons LLC, which has offices in Boise and 190 Albertsons Market stores, none of which are in Idaho. Cerberus acquired the stores in 2006, the same year SuperValu acquired Albertsons Inc. The Albertsons chain was started by Joe Albertson, who opened his first store in Boise in 1939.

The newly formed grocery chain will have 1,069 stores, 12 distribution centers and approximately 110,000 employees.

Albertsons LLC CEO Bob Miller said he’s excited about the reunion of the Albertsons brands.

“In 2006, we acquired a set of stores that lacked investment and were in tough shape, but with our great associates taking care of our customers every day we have grown into a solid regional supermarket chain with growing sales,” Miller said in a news release. “I believe we can be successful again.”

Albertsons LLC has 100 employees in Boise. Spokeswoman Christine Wilcox said it’s too soon to speculate on the organizational structure of NAI, but that the company is committed to growing same-store sales.

Supervalu has struggled for years to turn around its business. The broader supermarket industry has been facing growing competition from big-box retailers such as Target, drugstore chains and dollar stores. While bigger chains such as Kroger Co. have adapted by tweaking store formats and improving discount programs and product offerings, Supervalu has scrambled to keep pace.

This summer, Supervalu fired its CEO and tapped Chairman Wayne Sales to lead a turnaround. The company said at the time that it was reviewing its options, such as putting itself up for sale. In the meantime, it has closed stores and cut jobs as part of an effort to reduce costs. Those efforts to fix its business will continue after the sale of its grocery chains is complete, the company said. Sam Duncan, who most recently was CEO of OfficeMax, will replace Sales as head of Supervalu after the deal closes.

On Jan. 10, Supervalu also reported a profit of $16 million, or 8 cents per share, for the third quarter. The results were boosted by a gain related to a settlement with credit card companies. A year ago, the company lost $750 million, or $3.54 per share.

However, total revenue for the period declined 5 percent, to $7.9 billion. Sales at locations open at least a year fell 4.5 percent. Its profit margins also fell, in part because the company said it boosted promotions and cut prices for shoppers.

The Associated Press contributed to this story.

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