Supervalu to sell, leaseback eight distribution centers for $483 million
(Reuters) - U.S. supermarket operator Supervalu Inc (SVU.N) said on Tuesday it would sell eight of its distribution centers to an undisclosed buyer for about $483 million following pressure from activist shareholders, sending its shares up 3 percent.
The company, whose fourth-quarter earnings came in below what analysts expected, said after it closes the sale, it will enter into lease agreements for each of the facilities for an initial term of 20 years with renewal options.
Earlier this month Reuters reported, citing a source, that the company was exploring a potential sale encouraged by activist shareholders, including Blackwells Capital LLC.
Blackwells called on the company in October to “unlock the value” of its owned real estate, whose value it said exceeds Supervalu’s market cap, and also consider selling about 30 percent of the 217 stores it owns.
Separately, Supervalu posted higher fourth-quarter profit and revenue as it benefited from investments in its wholesale business.
Net income from continuing operations rose to $25 million, or 65 cents per share, in the quarter ended Feb. 24, from $24 million, or 65 cents per share, a year earlier.
Revenue rose 42 percent to $3.59 billion.
“Already in the first two months of fiscal 2019, we’ve capitalized on our business momentum by taking several decisive, strategic actions that further our transformation,” Chief Executive Officer Mark Gross said.
Shares of the Eden Prairie, Minnesota-based company rose about 3 percent to $15.05 in extended trading.
The company also said on Tuesday that it was pursuing the sale of its grocery store chain Shop ‘n Save in St. Louis and the chain’s retail operations along the East Coast.In March, the company said it would sell 21 of its 38 Farm Fresh Food and Pharmacy stores for about $43 million in a bid to steer its resources away from the retail business and remake itself as a distributor. The company had said it was also considering the sale of the remaining stores to wholesale customers and certain Farm Fresh employees.
Excluding certain items, the company earned 61 cents per share, missing the average analysts’ estimate of 79 cents, according to Thomson Reuters I/B/E/S.
The company also forecast net sales for fiscal 2019 to be $15.5 billion to $15.7 billion. Analysts on an average are expecting revenue of $17.16 billion.