Activist investor wants Supervalu to break up, consider sale

2/7/2018
Supervalu Inc., one of the largest grocery wholesalers and retailers in the U.S., is feeling the heat from Blackwells Capital LLC.

The activist investor, which owns approximately 4.35% of Supervalu’s stock, is planning a board fight and urging a breakup and potential sale of the company. Blackwell sent a blistering letter to the Supervalu board in which it claimed the company’s business model has failed to keep up with competitors and partners and that significant capital is trapped on the company’s balance sheet.

Blackwell had recommended a separation of the company’s wholesale and retail divisions. The wholesale business, which provides about 75% of Supervalu’s revenue and nearly all its operating profit, should be shopped to such potential buyers as SpartanNashCo, C&S or United Natural Foods, Blackwell said.

Blackwells intends to nominate director candidates to stand for election to Supervalu’s board at the company’s 2018 annual meeting, whose date has not yet been announced.

“In our view, the lackadaisical, misguided and value-destructive complacency of the company’s leadership necessitated our request for representation on the Board of Directors (the “Board”) for three Blackwells nominees, including myself, and the creation of a new Board committee, which would include the Blackwells nominees, to explore concrete measures of realizing shareholder value,” Jason Aintabi, managing partner at Blackwells Capital, stated in the letter.

The company rejected Blackwell’s request, leaving the investor with “no alternative but to run an election contest and give all shareholders an opportunity to vote for enhanced Board leadership and support a mandate to explore all alternatives to unlock value,’ it said.

Supervalu said in a statement that it has already “taken a number of critical steps to transform” its wholesale business, (including the recent acquisitions of Unified Grocers and Associated Grocers) and unlock its value for shareholders.

“Despite our efforts to reach a constructive path forward and to discuss overlapping objectives, Blackwells has decided to threaten an unnecessary and counterproductive proxy contest,” Supervalu stated.

In addition to its food distribution business, which serves 3,324 stores, Supervalu operates 213 traditional supermarkets operated under five retail banners in six geographic regions.
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