Retail company Supervalu announces agreement with Blackwells Capital

USA – Supervalu, a grocery industry leader in grocery wholesale distribution and professional services, has entered an agreement with Blackwells Capital, in which has agreed to withdraw its director nominees and vote all of its shares in support of SUPERVALU’s full slate of directors.

Supervalu said that under the accord, Blackwells will pull its director nominations and vote all of its shares in support of Supervalu’s slate of directors at the company’s annual shareholder meeting on Aug. 16.

According to the company, Blackwells also has dropped its stockholder proposal for the annual meeting and agreed to abide by certain customary standstill provisions in effect through July 30, 2019.

“We are pleased to have reached this agreement with Blackwells, as we may now dedicate our full attention to continuing to operate our business and to completing the transaction with United Natural Foods Inc., which delivers a substantial premium and immediate and certain value to our stockholders,” Supervalu Chairman Donald Chappel said in a statement.

The acquisition by United Natural Foods also will bring about the departure of Supervalu CEO Mark Gross.

New York-based Blackwells’ push for changes at Supervalu began in October 2017, when the investment firm sent a letter to the distributor’s board and management expressing concerns with the company’s performance and strategy.

At the time, Blackwells held about a 3.6% stake in Supervalu, making it one of the company’s largest shareholders.

Blackwells had recently announced its intention to nominate its own slate of directors to Supervalu’s board.

That came, Blackwells said, after Supervalu’s management and board proved unresponsive to shareholder frustration with the company’s performance and rejected the investment firm’s proposal for “real change” in the wholesaler’s operations, strategy and governance.

The company reported that Blackwells also launched a proxy fight with the nomination of six directors to Supervalu’s board, including grocery industry veterans Rick Anicetti, Robert Kreidler and Frank Lazaran.

Blackwells also outlined opportunities for Supervalu to boost shareholder value, including a sale-leaseback of its distribution center real estate, a sale or spinoff of the retail segment to transform the company into a pure-play wholesaler, and a sale or merger of the wholesale business to or with a competitor.

Meanwhile, Supervalu was already under way with a strategic transformation to grow its wholesale business, shift away from retail and solidify its financial footing.

Steps forward in that plan have included new leadership; the sale of Save-A-Lot for US$1.3 billion in 2016 and new wholesale customers such as The Fresh Market.

It also sold last year’s acquisitions of Unified Grocers and Associated Grocers of Florida, a US$483 million sale-leaseback deal for eight distribution centers and the divestiture of supermarket retail assets, including Shop ‘n Save in April and Farm Fresh in May.

Supervalu’s focus crystallized on July 26, when United Natural Foods unveiled an agreement to buy the company.

United Natural Foods said it plans to divest Supervalu’s retail assets “in a thoughtful and economic manner,” though no timetable was disclosed.

Plans call for Steve Spinner, chairman and CEO of United Natural Foods, to lead the combined company and for Sean Griffin, its chief operating officer, to oversee the integration of Supervalu after the deal is finalized.

The transaction is expected to close in the fourth quarter pending regulatory and shareholder approvals and other customary closing conditions.

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