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Could Supervalu Inc. sell off its profitable Save-A-Lot hard discount retail banner instead of spinning it off as the Minneapolis-based wholesaler distribution previously announced?
Interest from investors may push Supervalu in that direction, the news service Reuters is reporting.
Sources say Supervalu has informed private equity firms expressing interest in Save-A-Lot that the company will consider offers for the 1,300-plus-store chain after registering for a spin-off early next year.
Interested buyers would have to convince selling Save-A-Lot, which could be valued in excess of $1.7 billion, would be a better deal for shareholders than a spinoff, Reuters reported. The spinoff would be more tax-efficient for Supervalu, but sources indicated private equity firms want to leverage a tax shield resulting from a loss in Supervalu's $3.3 billion sale of its Albertsons, Jewel-Osco, Acme and Shaw’s retail banners to Cerberus Capital Management in 2013, Reuters reported.
Supervalu did not respond to a request for comment.
Last July, Supervalu announced it was exploring a spin-off of Save-A-Lot to insulate the fast-growing unit from its other retail operations and its wholesale distribution business that serves independent and chain grocers across the country.