SuperValu Responds to Pressure from Activist Investor, Outlines Plans for Growth
MINNEAPOLIS, MN - Activist investors are looking to gain control of one of the nations's largest grocery retailers' board, urging a breakup of wholesale and retail divisions, and potentially eyeing a sales, according to a recent report by The Wall Street Journal. In response to criticism from these investors, SuperValu has outlined a series of strategic goals and initiatives highlighting the success of the company's wholesale operations.
According to The Journal, Blackwells Capital LLC, an investment group that owns approximately 4.35 percent of SuperValu’s stock, privately approached the retailer’s board of trustees, asked that Blackwells be given three seats on the board, and detailed plans to form a committee to review potentially separating SuperValu’s retail and wholesale divisions in preparation for the sale of the company’s wholesale business. The board rejected the request, instead issuing an outline of its strategic goals moving forward.
“Discussions encompassed a variety of topics pertaining to the business and the company’s ongoing initiatives as well as our Board refreshment efforts—initiatives that have been underway substantially since before Blackwells became a stockholder,” SuperValu noted in its statement. “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.”
Also in its statement, SuperValu highlighted initiatives and strides the company has taken to strengthen its business, including the following:
- Adding more than $5 billion in run rate sales to bring the company’s core wholesale business to reach nearly $13 billion, including the addition of significant new wholesale customers such as The Fresh Market and the acquisition of two strategic wholesale companies of Unified Grocers and Associated Grocers of Florida this fiscal year
- Bringing in new leadership in Wholesale to drive operational improvements and ensure smooth integrations of acquired businesses
- Bringing in new leadership in Retail to make fundamental changes to this business and to better align retail initiatives with wholesale operations
- Completing the sale of the company’s Save-A-Lot banner for $1.3 billion, significantly reducing SuperValu’s debt, improving the company’s balance sheet, and creating the flexibility to pursue its growth strategy
- Continuing initiatives for sales and closures of select retail assets, monetization of real estate through sale leaseback transactions, and cost reductions.
The retailer also highlighted the various ways in which the company has been growing its wholesale operations, noting, “SuperValu has been rapidly and strategically transforming its business to become a wholesale company focused on the distribution of consumable products across the United States. Sales from SuperValu’s wholesale operations are now approximately 75 percent of its total annual sales, up from approximately 44 percent only two years ago.”
Will SuperValu's successes in wholesale keep the company out of these activist investors' hands? AndNowUKnow will continue to report as the story unfolds.