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Supervalu Says It Has Received Interest Amid Review

Supervalu Inc. (SVU), the third-largest U.S. grocery store chain, said it has received a “number of indications of interest” as it conducts a review of strategic options.

The company is in “active dialogue” with several parties, Eden Prairie, Minnesota-based Supervalu said today in a statement. There can’t be any assurance the review will result in a transaction, the company said.

Supervalu has been weighing a new direction after losing more than $2.5 billion in its previous two fiscal years, hurt by competition from discounters and costs to run stores. The company today posted sales in its fiscal second quarter that dropped 4.6 percent, the 14th straight quarterly decline.

“There’s a lot of work in front of them, and they’ve made some progress,” Joe Feldman, a New York-based analyst at Telsey Advisory Group, said in an interview. “There’s the hope that some sort of strategic action will be taken that might include some type of M&A that will help to monetize or create greater value from the business.”

A number of grocers, including Kroger Co. (KR) and Wal-Mart Stores Inc., are looking to expand, and non-food retailers also may be interested in Supervalu’s stores, he said.

Supervalu rose 3.4 percent to $2.11 at 9:57 a.m. in New York. The shares slumped 75 percent this year through yesterday.

Private Equity

The company has attracted interest from billionaire Ronald Burkle and buyout firms KKR & Co. (KKR) and TPG Capital, people with knowledge of the matter said earlier this month.

Burkle and the private-equity firms are looking at parts of Supervalu rather than the whole, said the people, who asked not to be named as the process is private. Supervalu would prefer a deal for the entire company and has extended its offer deadline past Oct. 15, the people said.

Cerberus Capital Management LP also has looked at some of Supervalu’s assets, said one person. Spartan Stores Inc. (SPTN), a grocery retailer based in Grand Rapids, Michigan, has also shown interest in some of Supervalu’s stores in the Midwest, two of the people said.

The company also today posted a net loss of $111 million, or 52 cents a share, in the fiscal second-quarter ended Sept. 8, compared with net income of $60 million, or 28 cents, a year earlier. Sales fell to $8.04 billion.

Supervalu said today it named Janel Haugarth, who is heading its company optimization efforts, to also lead its independent business organization.

Supervalu disclosed in July that it was working with Goldman Sachs Group Inc. (GS) and Greenhill & Co. (GHL) to review options.

The company has 1,099 traditional retail stores such as Jewel-Osco and Albertsons and has 1,341 Save-A-Lot discount locations.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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