Blackwells Launches Proxy Fight at Supervalu -- 3rd Update
March 22 2018 - 2:52PM
Dow Jones News
By Heather Haddon and Imani Moise
A proxy fight is under way at Supervalu Inc. as an activist
investor seeks to overhaul the board of directors at one of the
nation's largest grocery companies.
Blackwells Capital LLC has nominated candidates for six seats on
Supervalu's nine-person board. Board members will be elected at the
company's shareholder meeting later this year.
The activist investment firm said it chose the nominees based on
their independence and expertise. The slate includes formers
executives with Sysco Corp., Starbucks Corp., the High Ridge
Partners LLC financial firm and two regional supermarket
chains.
"We are delighted that so many experienced professionals have
offered to assist the company and its long-suffering shareholders,"
said Jason Aintabi, Blackwells's managing partner, in a
statement.
Supervalu officials said that, at six members, the nominations
are an effort to take control of the company. Supervalu said the
push is unfair to other shareholders and outsize to the stake
Blackwells holds.
Supervalu said that excluding certain options, Blackwells has a
2% stake in the company. Including those options, Blackwells said
its stake was 4.9%.
Supervalu said in a statement that its "transformation strategy
is well under way" and that it doesn't believe proposed board
changes from Blackwells are necessary to boost shareholder
value.
The nomination of board candidates escalates a fight between
activists and Supervalu that has brewed for around six months.
After Supervalu rejected Blackwells's earlier request for three
board seats, according to the investment firm, The Wall Street
Journal reported that the firm intended to nominate another group
of directors.
Supervalu's decision to inform shareholders about the board is a
sign the company is seeking to go on the offensive against the
activist, a person familiar with the matter said. The company has
made executives and board members available to Blackwells to
discuss their concerns for weeks, the person said.
Blackwells has been pushing for changes at Supervalu since
October when it called for the company to shed stores and bring in
new leadership. The firm has also tried to persuade Supervalu to
break itself up and explore a sale.
Supervalu earlier this month reached deals to sell 21 of its 38
Farm Fresh stores for $43 million and said it was exploring
transactions to sell the remaining locations.
In response to Supervalu's announcement, Jason Aintabi, managing
partner at Blackwells, said the sale of 10% of locations was an
"incremental step" and that it was "unfortunate that it took
substantial pressure from shareholders to motivate the company to
act on this vital strategic imperative."
Shares of Supervalu, which has a market capitalization of about
$573 million through Wednesday's close, have plunged 31% this year
and have been sliding for three years. The company has about $1.9
billion of debt as of last month.
Supervalu shares were down slightly in midday trading.
The Minneapolis-based company's wholesale division is a giant
supplier of goods and food to grocery chains across the country,
ranging from specialty supermarket the Fresh Market Inc. to
regional cooperative America's Food Basket. The retail segment
operates five supermarket chains, such as Shop 'n Save and Cub
Foods, in six areas of the country.
The Supervalu's wholesale operations have shown growth, while
its supermarkets have been a drag on its financials.
Write to Heather Haddon at heather.haddon@wsj.com and Imani
Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
March 22, 2018 14:37 ET (18:37 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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