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PITTSBURGH -- Kuhn's Quality Foods, a six-store grocer here, expanded its store count by nearly 25 percent with the acquisition of two of the 20 corporate Shop 'n Save stores Supervalu put on the block in September.
Supervalu, which had previously announced it would close two other Shop 'n Save stores in the Pittsburgh suburbs, has yet to reveal further plans for the remaining 16 regional locations, the fate of which are expected to be determined by the end of February, according to a spokeswoman for the Minneapolis-based distributor.
The two Shop 'n Save locations acquired by Kuhn's, currently a Supervalu-supplied customer, are in Cranberry and Ross Townships, both of which will close Saturday and reopen Sunday as Kuhn's Quality Foods.
In other news, Fitch Ratings said it may lower its ratings on Supervalu following the retailer-wholesalers announcement of the Albertsons deal to acquire 1,124 grocery stores from Albertsons for $12.4 billion. At the close of the pending acquisition, Supervalu is expected to have approximately $9.7 billion of debt, Fitch said in a statement. "As a result, credit metrics are anticipated to weaken significantly from current levels."
Supervalu's consideration for the transaction includes $3.8 billion in cash, $2.5 billion in stock, and $6.1 billion in assumed debt. The cash portion is expected to be financed in part with new debt. The boards of directors of both Supervalu and Albertsons have approved the transaction. However, the transaction, which is expected to close during the summer 2006, is subject to approval by Supervalu, Inc. and Albertson's stockholders as well as regulatory approvals.
In resolving the Rating Watch Negative status, Fitch said it will consider Supervalu's ability to successfully integrate the acquired stores, create a viable strategy that will address high levels of competition in its markets, and operate a significantly larger company. Also considered, said Fitch, will be Supervalu's sizeable more geographically diverse store base and strong market shares in key markets.