SUPERVALU INC. (NYSE: SVU), the owner of CUB Foods, along with four Twin Cities-based independent grocery retailers, today announced they had each entered into definitive agreements to acquire certain Rainbow Foods grocery stores. In total, they agreed to acquire 18 Rainbow grocery stores, including 13 Rainbow pharmacies and three Rainbow liquor stores in Minnesota. Jerry’s Enterprises, Haug Enterprises, Lund Food Holdings, and Radermacher Enterprises have joined SUPERVALU in executing these agreements. Once completed, the acquired stores are intended to be operated by SUPERVALU, a Cub franchisee or an independent retailer as 10 new CUB Foods locations, two new Byerly’s locations and six locations are expected to be operated under the Rainbow banner.
Of the 18 stores, SUPERVALU will have 100 percent ownership in three CUB stores, majority ownership in two CUB stores, minority ownership in three CUB stores and 100 percent ownership in two Rainbow stores as well as 100 percent ownership interest in eleven pharmacies. Roundy’s will be selling these 18 stores for approximately $65 million plus inventory. SUPERVALU’s aggregate purchase price across its multiple purchase agreements is approximately $35 million in cash plus the cost of inventory that will be purchased at the closing of the Rainbow store sale. In addition, as part of the transactions, SUPERVALU will assume certain lease obligations and certain multi-employer pension liabilities related to the stores being acquired by SUPERVALU.
“SUPERVALU is thrilled to participate in this consortium of retailers that is acquiring Rainbow stores,” said Sam Duncan, SUPERVALU’s president and chief executive officer. “We’re especially pleased that highly respected independent retailers here in the Twin Cities are also acquiring Rainbow stores. These independent retailers are great customers to SUPERVALU who understand the importance of being a strong community grocer.”
CUB Foods consists of a combination of corporate-owned and franchised locations. Following the close of the transactions, CUB Foods will total 66 stores in the Twin Cities and 77 stores banner-wide (including 76 stores in Minnesota and one store in Illinois). As part of acquiring these stores and with seasonal employment needs, CUB Foods expects to make more than 1,000 job offers in the coming months.