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January 11, 2013

Shaw's supermarket chain sold to private equity firm that owns Holy Family, Merrimack Valley hospitals

NEW YORK — Supervalu Inc., the parent company of Shaw’s Supermarkets, is selling off five of its grocery chains, including Shaw’s and Albertson’s, after years of being squeezed by intensifying competition.

The nation’s No. 3 traditional supermarket operator announced Thursday that the sale of 877 stores to an investor group led by Cerberus Capital Management will also include Albertson’s, Acme, the Jewell-Osco pharmacy chain, and Star Market. Cerberus already owns about 200 Albertson’s in the South and Southwest.

Following the sale, Supervalu will focus on its Save-A-Lot discount stores, as well as its smaller regional chains Cub, Farm Fresh, Shoppers, Shop ‘n Save and Hornbacher’s. It will also keep its wholesale business that distributes groceries to stores.

The investor group will pay $100 million in cash for the stores, and the new company will assume $3.2 billion in existing debt. Cerberus will also offer to buy up to 30 percent of the remaining Supervalu for $4 per share after the deal closes.

There was no word Thursday on what the pending deal will mean for any of the chains, including the Shaw’s string of superarkets that include several in Southern New Hampshire. It is also unclear if the sale will affect the Shaw's distribution center in Methuen.

Cerberus Capital Management, a private equity firm, also owns Steward Health Care, which oversees Holy Family Hospital in Methuen, Merrimack Valley Hospital in Haverhill and a dozen other health care facilities in Massachusetts.

A representative for the buyers of Shaw's and Albertson's noted that the transaction is still subject to approvals and declined to say whether any job cuts were planned for the newly acquired Albertson’s, or whether the other chains would retain their current names.

Supervalu has struggled for years to turn around its business. The broader supermarket industry has been facing growing competition from big-box retailers such as Target, drugstore chains and dollar stores. While bigger chains such as Kroger Co. have adapted by tweaking store formats and improving discount programs and product offerings, Supervalu has scrambled to keep pace.

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