Jewel-Osco Parent Company To Sell Chain To Investment Firm

By Chuck Sudo in News on Jan 10, 2013 3:40PM

SuperValu, the parent company of the Jewel-Osco supermarket chain, announced Thursday it was selling Jewel-Osco and four other brands to an investment firm.

The deal with AB Acquisition LLC is for $100 million in cash. AB Acquisition will also assume $3.2 billion in existing debt. AB Acquisition is an affiliate of investment firm Cerberus Capital Management, which specializes in investing in distressed investments. SuperValu had been looking to sell some of its brands for some time and the deal, which includes the Acme, Albertsons, Shaw’s and Star Market chains, will leave them with the Save-A-Lot brand and regional chains Cub Foods, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s.

Cerberus co-founder Steve Feinberg named the company after the three-headed dog of Greek Mythology that guards the gates of Hades. To be fair, the name and icon seems fitting for a venture capital firm. (Cerberus also boasts on its website that it benefits “from the guidance of high-level economic, public policy and international experts such as former Vice President of the United States Dan Quayle, chairman of Cerberus Global Investments.”)

Oooooo-kay.

The deal relieves SuperValu of significant debt as the company works to improve profits for its investors. As the Tribune notes, supermarket chains like SuperValu and Safeway (parent company of Dominick’s) have had a rough time competing with larger retail chains like Walmart and Target that are adding grocery sections to their stores, as well as discount supermarkets like Save-A-Lot, while having higher labor costs tied to union contracts. SuperValu reported a Fiscal Year 2012 loss of $1.04 billion.