OPERATIONS

Board changes at Supervalu in wake of acquisition

BY Staff Writer

New York — Supervalu directors Mark Neporent and Lenard Tessler have stepped down from the company’s board of directors as a result of Cerberus-owned Albertsons’ deal to acquire Safeway.

Neporent and Tessler were both appointed to the Supervalu board in 2013 as designees of Symphony Investors, a Cerberus Capital Management L.P.-led investor consortium. Symphony Investors owns approximately 20.9% of Supervalu’s outstanding common stock, and has the right to designate replacement directors for Neporent and Tessler.

Neporent is the chief operating officer and general counsel for Cerberus Capital Management. Tessler is the co-head of global private equity and senior managing director of Cerberus Capital Management.

“In light of the transaction announced today, we felt it was in the best interests of Supervalu for us to resign our seats on the Supervalu board,” said Neporent. “The directors who will be designated to replace Lenard and me under the tender offer agreement are expected to be independent of both Cerberus and Supervalu and will add to Supervalu’s outstanding board.”

News of the transaction broke late Thursday. AB Acquisition will acquire all outstanding shares of Safeway in a deal valued at more than $9.1 billion.

“I would like to thank Mark and Lenard for serving on Supervalu’s board of directors and for their important contributions during the transition period following the banner sale,” said Supervalu’s non-executive chairman Gerald Storch. “We look forward to working with Cerberus to identify two new, highly qualified director designees to replace Mark and Lenard, and who will help to lead our organization into the future.”

The transaction is expected to close in the fourth quarter of this year.

“I also would like to thank Mark and Lenard for their service. As the process moves forward to designate new directors, we are continuing our focus on driving sales and serving all of our customers, including providing services under the transition services agreements with Albertsons and New Albertsons,” added Supervalu CEO Sam Duncan.

Supervalu’s board currently has nine members, including seven members who are independent directors under the New York Stock Exchange listing standards.

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MARKETING/SOCIAL MEDIA

Survey: 39% of consumers ‘very confident’ in credit/debit card safety

BY Dan Berthiaume

Lenexa, Kan. – Only about four-in-10 (39%) of consumers are "very confident" that using a credit or debit card was safe. Half (49%) of consumers surveyed were only "somewhat confident." In light of the mass retail payment security breaches in recent months, Balance Innovations surveyed shoppers about their confidence in using credit and debit cards at their primary grocery store and whether they have changed their payment methods in response.

Respondents indicated only moderate confidence in credit and debit security and a move toward cash for some (32%). Survey results include:

• While 59% of shoppers have not made any changes in payments methods used, 32% plan to use cash more often, distantly followed by credit at 8%. Increased use of cash likely affects especially smaller purchases.

• Only 30% of shoppers age 50-64 said they were very confident about using a credit card at their primary grocery store. Younger shoppers (18-24) were more trusting (48%), but 46% say they do now use cash more often.

• Supermarket shoppers place the highest confidence in payment security (53%) compared with 33% of supercenter shoppers.

• Consumers’ food safety confidence (49% "very confident") exceeds their trust in payment security (39%). Important lessons can be drawn from historic food safety confidence ratings in that mass food safety breaches can very quickly turn consumers’ trust levels and drive changes in behavior.

"Many consumers like to use cash because it’s anonymous and carries little risk, but for retailers it can be very time consuming to manage and reconcile," said Shelley Bosler, senior VP for strategic innovations for Balance Innovations. "Increased usage of cash among consumers makes it all the more important for retailers to optimize cash processing policies at both the corporate and store levels."

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FINANCE

Albertsons to acquire Safeway in $9.1 billion deal

BY Michael Johnsen

Pleasanton, Calif. — Cerberus Capital Managament, which owns Albertsons, won the bid for Safeway.

Safeway and Albertsons on Thursday announced a definitive agreement under which AB Acquisition will acquire all outstanding shares of Safeway in a deal valued at more than $9.1 billion. The transaction is expected to close in the fourth quarter of this year.

The companies will operate independently until closing.

Bob Miller, who will be the executive chairman of the new company of more than 2,400 stores, said, "We intend on keeping the existing retail footprint of both companies." Safeway’s Robert Edwards will serve as president and CEO of the new company. "This deal will create a substantial cost savings," Miller told reporters and analysts Thursday evening. "These are real savings that we will be able to pass along to our customers in lower prices." Miller also noted that the increased buying heft will benefit all banners operating under Albertsons and Safeway.

Shareholders will receive $32.50 per Safeway share in cash, $3.65 per share on the sale of Safeway’s Mexican interest Casa Ley and other holdings and $3.90 per share with the distribution of Safeway’s ownership interest in Blackhawk to Safeway shareholders. That distribution is expected to happen in mid-April.

The merger agreement was unanimously approved by the board of directors of Safeway. AB Acquisition is the owner of Albertson’s and New Albertson’s (collectively “Albertsons”), and is controlled by a Cerberus Capital Management-led investor group, which also includes Kimco Realty Corporation, Klaff Realty, Lubert-Adler Partners and Schottenstein Stores Corporation.

As a result of the merger, Safeway shareholders are expected to receive total value estimated at $40 per share.

Albertsons’ Miller stated: “This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country. It also brings together two great organizations with talented management teams. Robert Edwards and his team have done an outstanding job in positioning Safeway’s core business for success by investing in its stores and creating innovative strategic marketing programs that contribute to shareholder value. Working together will enable us to create cost savings that translate into price reductions for our customers. Together, we will be able to respond to local needs more quickly and deliver outstanding products at the lowest possible price, more efficiently than ever before.”

“This merger is one of several actions we have taken in recent months as a result of our strategic business review. The combined value of the transactions described above is expected to deliver a premium to Safeway’s shareholders of 72% from one year ago, and 56% over the share price six months ago,” said Edwards, current president and CEO of Safeway. “Safeway has been focused on better meeting shoppers’ diverse needs through local, relevant assortment; an improved price/value proposition and a great shopping experience that has driven improved sales trends. We are excited about continuing this momentum as a combined organization. We look forward to working with Bob Miller and the rest of the Albertsons team as we proceed together on a path towards becoming an even stronger organization.”

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