Supervalu subject of buy-out talk

Supervalu subject of buy-out talk

Reports surfaced on Friday afternoon (12 March) that US supermarket group Supervalu could be poised for a leveraged buyout.

Shares in the company, which declined to comment on “rumour and speculation”, gained 6.6% throughout the day to close at US$17.13.

According to the rumour, Supervalu could fetch as much as $22.50 per share, almost seven times EBITDA.

However, according to Reuters, US analysts remained sceptical.

"Taking the whole thing private seems like a stretch," said BMO Capital Markets analyst Karen Short.

A rash of buyout rumours have excited the market, with speculation that the likes of GameStop and Radioshack were on the block coming to naught in recent weeks.

Supervalu is the second largest US retailer and operates the Supervalu, Albertsons and Jewel-Osco banners.

The company has struggled to maintain sales and profits during the downturn as attempts to adjust its value positioning have had limited success.

Supervalu has attempted to move away from promotional activity and towards everyday low prices and has announced plans to double the size of its Save-A-Lot discount format over the next five years in a bid to increase its appeal to price conscious US consumers.