Could SuperValu Be Retail's Next Big Acquisition Target?

Could SuperValu Be Retail's Next Big Acquisition Target?

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EDEN PRAIRE, MN - Those who keep a close eye on this industry’s mergers and acquisitions are probably familiar with the inevitable domino effect. The past few years have been ripe with big retail moves: Albertsons and Safeway, Walmart and Jet, and SpartanNash and Caito, to name a few. Now, according to a report by Bloomberg’s Gillian Tan, SuperValu may be the latest target primed for an acquisition.

Following the company’s December sale of its Save-A-Lot grocery chain to Canadian private equity firm Onex Corp., the company may have just enough capital to both pay down debt and focus on its wholesale-distribution business, Tan writes, adding that analysts now track SuperValu’s fiscal 2018 revenue to grow by as much as $1 billion—more than 10 percent. 

However, despite this bright outlook, SuperValu’s shares have generally fallen over the past fiscal year—more than 30 percent, in fact, likely due to increasing retail competition and food price deflation.

Credited to Google Finance

As analysts look to the future with SuperValu as a possible acquisition target, many track the company’s shares as gaining more than 50 percent over the next year. And, as Bloomberg puts it, potential merger partners could capitalize on this disconnect

So, who are some of SuperValu’s possible industry suitors? 

One retailer that keeps coming up during discussions is Grand Rapids, Michigan-based SpartanNash. On the heels of its $218 million Caito Foods acquisition, SpartanNash could potentially make an all-stock transaction at a 50 percent premium—making for an immediately accretive deal, Bloomberg suggests.

Another possible buyer could be United Natural Foods Inc. (UNFI). As we’ve been reporting, the company has made several high profile acquisitions as of late, including Haddon House Food Products, Inc., Global Organic/Specialty Source, Inc., Nor-Cal Produce, Inc. and Gourmet Guru, Inc. Bloomberg suggests that UNFI could theoretically take an all-stock merger at a generous premium, which would also boost its earnings. 

Will either of these suitors rise to the occasion before SuperValu finds its footing in this retail landscape? AndNowUKnow will continue to update you on the latest industry rumblings.