Supervalu announced a restructuring plan to convert it into a holding company that would further segregate its retail and wholesale operations.
The Eden Prairie-based company filed a preliminary proxy statement Tuesday with the Securities and Exchange Commission detailing the company’s latest plan.
“We have been executing a strategic transformation of our business over the last two years to become the wholesale supplier of choice for grocery retailers across the United States, while also executing initiatives to deliver long-term stockholder value,” said Mark Gross, Supervalu’s president and CEO, in a news release. “The proposed holding company structure is another significant and important undertaking by our team that would support and advance our transformation by further separating our wholesale and retail operations in a tax-efficient manner.”
Supervalu is one of the country’s biggest grocery wholesalers, with that segment contributing 78 percent of overall revenue during the last fiscal year. The company also operates about 200 grocery stores, chiefly in the Midwest with its biggest chain being Cub, the market leader in the Twin Cities.
Under the plan, a holding company called Supervalu Enterprises Inc. would be formed in a tax-free transaction to shareholders. That entity’s name would revert to Supervalu Inc. after the transaction. The company would maintain its current stock symbol of SVU.
Supervalu said the plan would give it more strategic and financial flexibility and “facilitate the company’s previously announced strategic transformation plan to sell certain retail assets to third parties.”
Supervalu has been under pressure from an alternative asset-management firm, Blackwells Capital, since October. The New York-based firm took an ownership position in Supervalu and urged the board of directors that it should sell a third of its retail grocery stores and some real estate to return value to shareholders.
Blackwells was frustrated with the long downward trend of Supervalu’s stock and the company’s plans to create shareholder value. Blackwells, which hadn’t previously launched an activist shareholder campaign, increased its pressure on Supervalu’s board in February, saying it needed to sell its wholesale business and in March started a proxy battle by nominating a slate of six independent director nominees for places on Supervalu’s nine person board.
Supervalu responded to Blackwells in February saying a “rapid transformation” was underway.
A filing by Blackwells on May 29 showed that it had increased its ownership stake in Supervalu to 7.3 percent.
A date has not yet been set for an annual meeting where shareholders could vote on the new holding-company structure and new director candidates. Supervalu, whose fiscal year ends in February, typically has its annual meeting in the third or fourth week of July.
Shares of Supervalu ended Wednesday at $19.89, down 21 cents or 1.04 percent. Year-to-date shares are down 5.8 percent and down 30.1 percent in the last year.
Patrick Kennedy • 612-673-7926