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Supervalu mulls spin-off of Save-A-Lot chain

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MINNEAPOLIS — Supervalu Inc. said Tuesday that it is considering a spin-off of its Save-A-Lot discount grocery chain into a separate, publicly traded company.

Supervalu Inc. said Tuesday that it is considering a spin-off of its Save-A-Lot discount grocery chain into a separate, publicly traded company.

Save-A-Lot is a national hard discount food retailer with more than 1,300 stores, including about 430 corporate-owned outlets and about 900 operated by licensees.

"We believe Save-A-Lot has significant growth potential," said Supervalu president and chief executive officer Sam Duncan. "Over the last two and a half years Save-A-Lot has repositioned its brand, refocused its efforts on fresh produce and meat, and remerchandised its stores and product offerings to better appeal to a broader group of customers."

Duncan said the possible spin-off is being considered as part of an ongoing effort to maximize value for shareholders. It would also allow the three segments of Supervalu’s business — Save-A-Lot, Supervalu’s wholesale business and its traditional supermarket business — "to better focus on their respective operations, and pursue strategies specific to their business characteristics and growth potentials," Duncan said.

Supervalu said it had not set a specific timetable for a separation and that, in fact, it is possible no spin-off will occur. The company has hired Barclays and Greenhill to serve as financial advisors, and Wachtell, Lipton, Rosen and Katz as legal advisor, in connection with the possible separation.

Save-A-Lot accounted for about 26% of Supervalu’s revenue in the first quarter. Supervalu reported first quarter net sales of $5.41 billion and net earnings from continuing operations of $63 million.

"We delivered sales increases across all three business segments and managed our costs very well in this first quarter," Duncan said. "I’m pleased with our bottom line and ability to manage to these results in spite of softer sales at Save-A-Lot and in our retail food stores. We have plans in place, and operationally we remain well positioned."

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