SVU Supervalu Inc. (delisted)

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)

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