EDEN PRAIRIE, Minn. -- Grocery distributor Supervalu Inc. is preparing to explore an outright sale of its discount grocery retail chain Save-A-Lot, according to a Reuters report.
In July, Supervalu announced it was exploring a separation of the smaller-format, limited-assortment grocery business, and that it had begun preparations to allow for a possible spinoff of Save-A-Lot into a standalone, publicly traded company.
However, the Eden Prairie, Minn.-based retailer has received interest in Save-A-Lot from several private-equity firms, and has told them that it will consider offers once it registers the unit with regulators for a spinoff in early 2016, sources told Reuters this past week.
While an in-house spinoff would be more tax-efficient for Supervalu, private-equity firms are hoping to take advantage of a “so-called tax shield” resulting from a loss in Supervalu's $3.3-billion sale of supermarket retailer Albertsons Inc. and other stores to Cerberus Capital Management LP in 2013, according to the report.
Buyout firms would still have to convince the company, however, that their offers would represent better value to Supervalu shareholders compared to a spinoff, sources said. Save-A-Lot could be valued at more than $1.7 billion. There are more than 1,300 Save-a-Lot stores nationwide.
Click here to read the complete Reuters report.
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