New York, United States (Reuters)
Private equity firm Cerberus Capital Management LP is nearing an agreement to buy parts of Supervalu Inc and an announcement could come as early as next week, a person familiar with the matter said on Friday.
The Minneapolis, Minnesota-based grocer has been closing stores and cutting costs to reverse losses and cut debt. It suspended its dividend in July to fund aggressive price cuts and it also put itself up for sale.
Cerberus and its partners plan to buy some Supervalu assets and take a stake in the remaining public company after banks balked at financing a deal for all of the third-largest U.S. supermarket operator on the proposed terms, the person said. The person spoke on condition of anonymity because negotiations are confidential.
A Supervalu spokesman said on Friday the company's review of strategic alternatives was proceeding and that it was in "active discussions with several parties." He declined to comment further.
Supervalu owns store chains that include Jewel-Osco, Save-A-Lot and Albertsons.
Cerberus, a New-York-based private equity firm that specializes in turning around companies and has over $20 billion of assets under management, declined to comment.
Supervalu shares closed up 13.5 percent on Friday, giving the company a market value of about $630 million. The Wall Street Journal earlier published a report on its website on the status of the deal.
A deal for all of Supervalu would have required that Cerberus contribute about $900 million as equity, according to another person familiar with the talks. After some banks objected, the deal was downsized and the equity became about $500 million, the source added.
Save-A-Lot, one of Supervalu's better performing businesses that competes with Kroger Co's discount Food-4-Less chain, is likely to be sold separately, the second person and another person familiar with the matter said this week.
Cerberus' Supervalu strategy is widely expected to mirror its play-book at Albertsons, the supermarket chain sold to the private equity investor, Supervalu and CVS Caremark Corp for $10 billion in 2006.
Cerberus acquired 655 Albertsons locations and a few belonging to various other brands in the complicated carve-out, under which Supervalu bought the remaining 564 Albertsons stores. Cerberus sold most of its assets, but held on to Albertsons.
In October, Supervalu posted a net loss of $111 million, or 52 cents per share, for the second quarter ending on Sept. 8 compared with a year-earlier profit of $60 million, or 28 cents a share.
By Greg Roumeliotis and Olivia Oran, Reuters, January 5, 2013
Retail sales fell in October as American consumers pulled back after a three-month shopping spree and superstorm Sandy slammed into the East Coast, shutting malls and auto showrooms.
The 0.3 percent drop followed a 1.3 percent increase in September that was larger than previously reported, Commerce Department figures showed today in Washington. While it was able to collect information from the affected area, the agency said it couldn’t quantify the impact of the biggest Atlantic storm.
Companies such as General Motors Co. (GM) and Ford Motor Co. (F) said last month’s storm-related sales slump will probably reverse as brighter job prospects, rising home prices and sturdier finances boost household confidence. At the same time, today’s report showed Americans bought fewer non-essentials, which may reflect mounting concern over possible tax changes and limited wage growth that pose risks for the biggest part of the economy.
“Some of it is due to hurricane taking away some discretionary sales,” said Jonathan Basile, director of U.S. economics at Credit Suisse in New York. “Spending still seems subpar, and consumers are facing headwinds on their paychecks and incomes. They’re also faced with uncertainties about taxes going into year-end.”
Stocks fell as concern about the budget debate in Washington overshadowed an advance in technology shares after Cisco Systems Inc.’s earnings topped estimates. The Standard & Poor’s 500 Index dropped 0.5 percent to 1,368.38 at 12:33 p.m. in New York.
Other reports today showed U.S. wholesale prices unexpectedly dropped in October and inventories climbed in September.
The decline in wholesale prices was led by falling fuel and vehicle costs. The producer-price index dropped 0.2 percent last month after rising 1.1 percent in September, according to Labor Department data.
Stockpiles climbed 0.7 percent in September after a 0.6 percent gain, according to another Commerce Department report today. Sales at factories, wholesalers and retailers rose 1.4 percent, the biggest gain since March 2011, after advancing 0.6 percent in August.
The median forecast of 83 economists surveyed by Bloomberg for October retail sales called for a drop of 0.2 percent. Estimates ranged from a decline of 1.2 percent to an advance of 0.6 percent. The September reading was revised from an initially reported 1.1 percent gain.
October’s slowdown comes after the prior two months marked the best back-to-back retail sales showing since late 2010. Part of the jump in purchases during the most-recent period was the result of households snapping up Apple Inc.’s new iPhone 5. Support also came from car and light truck sales, which climbed in September to a 14.9 million pace, the fastest in more than four years, according to figures from Ward’s Automotive Group.
Those gains weren’t repeated in October, when Sandy prevented potential shoppers from getting to stores. Today’s retail sales figures show the storm’s effects are starting to show up in economic data.
The Commerce Department said it received responses from 2,579 retailers last month, within the 12-month range of 2,517 to 2,781.
“Even though we cannot isolate the effect, we did receive indications from the companies that the hurricane had both positive and negative effects on the retail sales data,” the Commerce Department said in a statement.
Eight of 13 major categories showed a decline last month, led by auto dealers and building-material stores. Service- station sales and food purchases jumped.
“When consumers are cautious they tend to spend more on staples than discretionary items, and that’s exactly what happened this month,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, who correctly forecast the decline in sales. “The broad story is that consumers remain cautious.”
Sales decreased 1.5 percent at automobile and parts dealers after a 1.7 percent gain the prior month. Industry figures showed sales fell to a 14.2 million pace in October after Sandy struck during the auto industry’s busiest time of the month. Carmakers said those sales should be made up by the end of the year.
Retail sales excluding autos were little changed. They were projected to rise 0.2 percent, according to the Bloomberg survey median.
Several retailers reported a pickup in October demand despite the storm. Same-store sales at Macy’s Inc., the second- biggest U.S. department-store chain, rose 4.1 percent, topping the 4 percent average estimate of analysts surveyed by Retail Metrics Inc. Kohl’s Corp.’s same-store sales climbed 3.3 percent, beating estimates for a 0.8 percent gain.
The retail sales category used to calculate gross domestic product, which excludes auto dealers, building-material stores and service stations, declined 0.1 percent after a 0.9 percent increase in the previous month, today’s report showed.
As the holiday shopping seasons begins, Hasbro Inc. (HAS)’s retail customers are “looking forward to a good year,” David Hargreaves, chief operating officer of the Pawtucket, Rhode Island-based toymaker, said during a call with analysts on Oct. 22. “Certainly consumer demand has held up pretty well. I think they’re sort of cautiously optimistic.”
Improving confidence could help keep sales on the rise. The Thomson Reuters/University of Michigan consumer sentiment gauge advanced to a five-year high in November. Rising house prices are also shoring up wealth: The S&P/Case-Shiller index of home values in 20 cities has risen from a year earlier for the past three months, the longest positive stretch in two years.
Even with the gain in confidence, the so-called fiscal cliff of tax increases and government cutbacks totaling $607 billion and scheduled to take effect next year serves as a reminder to households that the expansion faces hurdles.
Compensation is also lagging behind. Average hourly earnings climbed 1.6 percent in October from the same time last year, the smallest gain since comparable year-over-year records began in 2007, a Labor Department report showed on Nov. 2. Earnings for production workers rose 1.1 percent in the 12 months to October, the weakest since records began in 1965.
By Alex Kowlaski, Bloomberg, 14 of November, 2012
The companies are now battling it out over who is the third-most valuable company on public markets, behind Exxon Mobil XOM +0.38% and Apple AAPL -1.16%, which is increasingly becoming a competitor to Google.
Google passed Microsoft at 9:31 a.m. eastern time today, but fell shortly below Microsoft at 9:36 a.m. It then passed it and has been larger since 9:37 a.m., according to FactSet Research Systems.
It was just last week when it looked like Google would catch up to Microsoft in terms of company value, as concerns over its acquisition of Motorola Mobility began to fade. Google’s share price is up 30 percent this quarter.
Google and Microsoft now compete on search, thanks to Microsoft’s new Bing search engine, and on mobile devices thanks to Google’s growth in Android.
Now Google is in an escalating arms race with Apple, the next company in Google’s sights, after Apple launched its own less-than-savory maps application that replaced a Google-powered version on the iPhone.
Apple CEO Tim Cook ended up apologizing for the app, and suggested Google’s Web-based maps application that you access through a mobile browser as an alternative, along with several others map applications.
By Mathew Lynley, The Wall Street Journal, October 2, 2012