Supervalu buys 18 Rainbow stores in $65M deal

Roundy's is exiting the Minneapolis market. The grocer announced the sale of 18 Rainbow supermarkets to a group of local grocery retailers, including Supervalu (NYSE: SVU), for $65 million plus the proceeds from inventory.

Once the purchase is complete, 10 of the sites will become Cub Foods locations, two will be Byerly's and six will operate as Rainbow.

"The economic downturn over the last few years, coupled with an increased competitive footprint in the Minneapolis/St. Paul Market, has made it difficult for Roundy's to keep the Rainbow banner competitive," said CEO Robert Mariano. "The transaction will also allow us to better focus strategically on growing our Mariano's banner in the Chicago market and strengthening our business in our core Wisconsin markets."

The consortium of Rainbow buyers also includes Jerry's, Haug and Radermacher Enterprises. Roundy's is still seeking additional buyers for its remaining nine Rainbow stores. The company expects to either sell or close those remaining stores, and fully exit the Minneapolis/St. Paul market.

The sale of the 18 stores is expected to close during the third quarter. Roundy's expects to use the sale proceeds to pay down debt.

Roundy's operates 169 retail grocery stores and 114 pharmacies, under the Pick 'n Save, Rainbow, Copps, Metro Market and Mariano's retail banners in Wisconsin, Minnesota and Illinois.

Supervalu operates a network of 3,339 stores composed of 1,819 independent stores serviced primarily by the company's food distribution business, 1,330 Save-A-Lot stores and 190 traditional retail grocery stores. Cub Foods was purchased in 1980 by Supervalu and currently operates 67 corporately owned and franchised stores in Minnesota and Illinois.

For more:
-See this Supervalu press release

Related stories:
Cub Foods grows reward program with more mobile coupons
Supervalu names Gerald Storch chairman
Safeway sold for $9 billion, will merge with Albertsons
Safeway stock rallies on buyout rumors; debt concerns rise
Investors happy about Safeway shedding Dominick's