Supervalu has reached an agreement to sell its Save-A-Lot grocery chain, ending more than a yearlong search for a buyer.
Toronto-based investment group Onex Corp. will buy the business for $1.365 billion in cash. Supervalu and Save-A-Lot will enter into a five-year professional services agreement whereby Supervalu will provide certain services and support functions for Save-A-Lot's day-to-day operations, including cloud services, merchandising technology, payroll, finance, and other technology and hosting services.
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The sale of Save-A-Lot is expected to be completed by January 31, 2017, subject to regulatory approvals and other customary closing conditions, according to the company. The company had been trying to sell the nearly 1,400-store chain to focus on its wholesale operations. Supervalu still owns roughly 2,000 stores under different banners, including Cub Foods.
"Today’s announcement is the result of a thorough process to maximize the value of the Save-A-Lot business and best position Supervalu for future success," said Jerry Storch, non-executive chairman. "Supervalu is successfully executing on its long-term strategic vision and positioning the company for continued growth and value creation. We are confident that this transaction will create exciting opportunities for both Supervalu and Save-A-Lot."
"The sale of Save-A-Lot is another important step in Supervalu’s transformation. It provides us with a stronger balance sheet that will allow us to further build on our core strengths and growth opportunities,” said President and CEO, Mark Gross. "It has been a pleasure to work with the Save-A-Lot team, and, once this transaction is completed, I look forward to continuing to work with them as one of our largest professional services customers."