Supervalu Inc. (NYSE:SVU) shares were booming as a discount grocery chain operated by the company may be bought out.
Private equity firm Onex Corporation is reportedly leading the charge to acquire Save-A-Lot, which is a grocery retailer that Supervalu owns. The price tag on the company is still unclear, but it could be worth as much as $1.8 billion.
Onex has reportedly made the best offer in the race to buy Save-A-Lot, which Supervalu has considered selling off for a while. The business has been growing at a fast pace, but selling it could be quite beneficial to its parent company as it would improve its profit margins in its wholesale distribution business.
The move would counteract the decline in price pressures and slower traffic in its stores. A decision will likely be made over the course of the next two weeks, but the idea of a spinoff company comprised of Save-A-Lot could be another option.
This news was disclosed by sources that prefer to remain anonymous as the negotiations are still under wraps. The move follows Supervalu’s attempt to spin off Save-A-Lot a year ago, with an outright sale of the chain becoming an alternative as firms expressed their interest.
Save-A-Lot has more than 470 stores in the U.S., and there are also 896 stores that will be operated by licensees in the near future. Most of these will be located in the Southern and Eastern parts of the U.S.
SVU stock is up 8.2% Thursday.
