Cases & Deals

Albertson's acquired by consortium of investors for $17.4 billion

Clients Albertson's, Inc.

Jones Day advised Albertson's, Inc. in its acquisition by a consortium of investors for a total transaction value of approximately $17.4 billion in cash, stock and assumed debt. Members of the consortium included SUPERVALU INC., CVS Corporation, and an investor group led by Cerberus Capital Management, L.P. that also includes Kimco Realty, Schottenstein Realty, Lubert-Adler Partners, and Klaff Realty, LP.

Under the terms of the agreement, Albertson's shareholders received $20.35 in cash and a fixed exchange ratio of 0.182 shares of SUPERVALU stock, valued at $5.94, for each Albertson's share, on a fully diluted basis. Albertson's shareholders owned approximately 35% of the substantially enlarged SUPERVALU upon completion of the transaction.

Assets and operations were divided among consortium members as follows:

SUPERVALU acquired approximately 1,124 operating stores and 100 percent of the support operations for Acme Markets, Bristol Farms, Jewel-Osco, Shaw's, and Star Markets, as well as all Albertson's banner stores in Idaho, Southern Nevada, Utah, Southern California, and the Northwestern U.S. The deal also included all of the combo-store pharmacies, which operate under the Osco and Sav-on banners. These assets combined with SUPERVALU's existing assets to create a strong new company with 2,656 stores in 48 states plus the District of Columbia and approximately $44 billion in revenues, making it the second largest supermarket company in America.

CVS acquired 100 percent of the stand-alone drugstore business, including approximately 700 freestanding stores as well as a distribution center located in La Habra, California. CVS also acquired Albertson's ownership interests in the drug store real estate and planned to sell these interests n a sale-leaseback transaction. The Sav-on and Osco banners were not part of the sale to CVS. All stand-alone drugstores included in the transaction were re-bannered as CVS.

The Cerberus-led consortium acquired 655 operating stores and 100 percent of the distribution centers and offices in Albertson's Dallas/Fort Worth division, and in the Florida, Northern California, Rocky Mountain and Southwestern regions. These stores operate under the Albertson's and Super Saver banners and also include the combo-store pharmacies under the Osco and Sav-on banners. Cerberus also purchased 26 Cub Stores from SUPERVALU in the Chicago area for an undisclosed amount.

SUPERVALU agreed to provide the necessary transition services to all consortium members for an unspecified length of time.

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