US-based Supervalu Inc. has agreed to sell the Save-A-Lot grocery chain to Canada’s Onex Corp. for $1.37 billion in cash and will use the proceeds to repay debt.
As part of the deal, Supervalu will provide services such as payroll and merchandising technology to Save-A-Lot for five years, the Minneapolis-based company said in a statement Monday. The company expects to complete the deal by Jan. 31, it said.
Supervalu plans to use the proceeds to prepay at least $750 million against its term loan balance, to further reduce debt and improve its capital structure, as well as to fund growth initiatives, it said.
Barclays Capital Inc. and Greenhill & Co. acted as financial advisers to Supervalu, and Wachtell, Lipton, Rosen & Katz is its legal adviser.
St. Louis-based Save-A-Lot operates about 1,370 hard-discount grocery stores, Onex said in a separate statement.
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