SUPERVALU Confirms Deal to Sell Five Retail Grocery Banners, Tender Offer for 30% of Shares at $4/Share

SUPERVALU Inc.

announced today a definitive agreement under which it will sell its Albertsons, Acme, Jewel-Osco, Shaw's and Star Market stores and related Osco and Sav-on in-store pharmacies (collectively, the “Banners”) to AB Acquisition LLC (“AB Acquisition”), an affiliate of a Cerberus Capital Management L.P. (“Cerberus”)-led investor consortium which also includes Kimco Realty Corporation

, Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group, in a transaction valued at $3.3 billion. Sam Duncan (Photo: Business Wire) Sam Duncan (Photo: Business Wire) The sale will consist of the acquisition by AB Acquisition of the stock of New Albertsons, Inc. (“NAI”), a wholly-owned subsidiary of SUPERVALU, which owns the Banners, for $100 million in cash (the “Sale”). NAI will be sold to AB Acquisition subject to approximately $3.2 billion in debt, which will be retained by NAI. As part of the transaction, which includes 877 stores across the Banners, AB Acquisition-owned Albertson's LLC will reunite its Albertson's stores with the acquired NAI Albertsons stores. In addition to the Sale, within ten business days of today, a newly-formed acquisition entity owned by a Cerberus-led investor consortium (“Symphony Investors”) will conduct a tender offer for up to 30 percent of SUPERVALU's outstanding common stock at a purchase price of $4.00 per share in cash (the “Tender Offer”). The Tender Offer represents a 50 percent premium to SUPERVALU's thirty-day average closing share price as of January 9, 2013, and provides SUPERVALU's shareholders with the opportunity to maintain an equity stake in SUPERVALU moving forward. In the event that Symphony Investors does not obtain at least 19.9 percent of the outstanding shares of SUPERVALU common stock pursuant to the Tender Offer, SUPERVALU will be obligated to issue new shares of common stock to Symphony Investors (the “Issuance”) at the Tender Offer price such that after giving effect to the Tender Offer and the Issuance, Symphony Investors would own a number of shares representing at least 19.9 percent of SUPERVALU's outstanding common stock prior to the Issuance. SUPERVALU also will have the option to issue to Symphony Investors additional new shares of SUPERVALU common stock at the Tender Offer price (the “Optional Issuance”), subject to (i) an overall cap of $250 million on Symphony Investors purchase of common stock pursuant to the Tender Offer, the Issuance and the Optional Issuance (collectively, the “Tender Offer Process”) and (ii) a total issuance of primary common shares of not more than 19.9 percent. The transactions described above are subject to customary closing conditions, including the fully underwritten refinancing of certain SUPERVALU debt as described below. The closing of the Sale is also conditioned on among other things, the satisfaction of the conditions to the Tender Offer Process, and the closing of Symphony Investors acquisition of SUPERVALU common stock pursuant to the Tender Offer Process is conditioned on, among other things, closing of the Sale. Closing of the Sale and the Tender Offer Process (together the “Transactions”) is expected to occur in the first calendar quarter of 2013. The Transactions are not subject to shareholder approval. Management and Governance Following the closing of the Transactions, SUPERVALU will be headed by grocery retail veteran Sam Duncan, as President and Chief Executive Officer, replacing current President, Chief Executive Officer and Chairman, Wayne Sales. In addition, effective upon the closing of the transactions, five current SUPERVALU directors will resign. Immediately following the closing of the transactions, the size of the Board will be reduced to seven members from the current ten members. This seven member Board will consist of five current SUPERVALU directors and two Board members designated by Symphony Investors, one of whom is Robert Miller, current President and CEO of Albertson's LLC, who will serve as non-executive Chairman of the Board. Following the completion of a search process, the Board will be increased to a size of eleven directors, with the four new directors to consist of (i) Sam Duncan, (ii) an additional director appointed by Symphony Investors, and (iii) two additional independent Board members to be selected by the initial seven directors. The New SUPERVALU Following the Sale, SUPERVALU will consist of the Independent Business, a leading food wholesaler which serves 1,950 stores across the country; Save-A-Lot, the largest hard discount grocery chain in the United States, with approximately 1,300 stores; and SUPERVALU's leading regional retail food banners Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher's. As such, SUPERVALU is expected to generate annual revenues in excess of $17 billion. Key elements of SUPERVALU's go-forward business plan include continued focus on right-sizing operations and maximizing efficiencies across the Company. SUPERVALU and AB Acquisition also will enter into a Transition Services Agreement pursuant to which the parties will provide each other with various services. Financing In connection with the Transactions, SUPERVALU has negotiated a new and fully underwritten $900 million asset based revolving credit facility led by Wells Fargo and a $1.5 billion term loan secured by a portion of the Company's real estate and an equity pledge of Moran Foods, LLC (the parent entity of the Save-A-Lot business) led by Goldman Sachs Bank USA, Credit Suisse, Morgan Stanley, Bank of America Merrill Lynch and Barclays. The proceeds of these financings will be used to replace the existing $1.65 billion asset-based revolving credit facility, the existing $846 million term loan, and to call and refinance $490 million of 7.5 percent bonds scheduled to mature in November 2014. Successful Culmination of Strategic Review Process; Ongoing SUPERVALU Operations Better Positioned for Future