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Sam Duncan (Photo: Business Wire)

Stocks in this article: SVU

SUPERVALU Inc. (NYSE: SVU) announced today a definitive agreement under which it will sell its Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market stores and related Osco and Sav-on in-store pharmacies (collectively, the “Banners”) to AB Acquisition LLC (“AB Acquisition”), an affiliate of a Cerberus Capital Management L.P. (“Cerberus”)-led investor consortium which also includes Kimco Realty Corporation (NYSE: KIM), Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group, in a transaction valued at $3.3 billion.

Sam Duncan (Photo: Business Wire)

Sam Duncan (Photo: Business Wire)

The sale will consist of the acquisition by AB Acquisition of the stock of New Albertsons, Inc. (“NAI”), a wholly-owned subsidiary of SUPERVALU, which owns the Banners, for $100 million in cash (the “Sale”). NAI will be sold to AB Acquisition subject to approximately $3.2 billion in debt, which will be retained by NAI. As part of the transaction, which includes 877 stores across the Banners, AB Acquisition-owned Albertson’s LLC will reunite its Albertson’s stores with the acquired NAI Albertsons stores.

In addition to the Sale, within ten business days of today, a newly-formed acquisition entity owned by a Cerberus-led investor consortium (“Symphony Investors”) will conduct a tender offer for up to 30 percent of SUPERVALU’s outstanding common stock at a purchase price of $4.00 per share in cash (the “Tender Offer”). The Tender Offer represents a 50 percent premium to SUPERVALU’s thirty-day average closing share price as of January 9, 2013, and provides SUPERVALU’s shareholders with the opportunity to maintain an equity stake in SUPERVALU moving forward.

In the event that Symphony Investors does not obtain at least 19.9 percent of the outstanding shares of SUPERVALU common stock pursuant to the Tender Offer, SUPERVALU will be obligated to issue new shares of common stock to Symphony Investors (the “Issuance”) at the Tender Offer price such that after giving effect to the Tender Offer and the Issuance, Symphony Investors would own a number of shares representing at least 19.9 percent of SUPERVALU’s outstanding common stock prior to the Issuance. SUPERVALU also will have the option to issue to Symphony Investors additional new shares of SUPERVALU common stock at the Tender Offer price (the “Optional Issuance”), subject to (i) an overall cap of $250 million on Symphony Investors purchase of common stock pursuant to the Tender Offer, the Issuance and the Optional Issuance (collectively, the “Tender Offer Process”) and (ii) a total issuance of primary common shares of not more than 19.9 percent.

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