UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
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Preliminary
Proxy Statement
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for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☐
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Definitive
Proxy Statement
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☒
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Definitive
Additional Materials
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☐
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Soliciting
Material under §240.14a-12
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SUPERVALU
INC.
(Name
of Registrant as Specified In Its Charter)
Blackwells
Capital LLC
Jason
Aintabi
Richard
A. Anicetti
Steven
H. Baer
R.
Chris Kreidler
Frank
Lazaran
James
J. Martell
Sandra
E. Taylor
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Blackwells
Capital LLC, together with the other participants named herein (collectively, “Blackwells”), has filed a definitive
proxy statement and accompanying GREEN proxy card with the Securities and Exchange Commission to be used to solicit votes for
the election of its slate of highly-qualified director nominees at the 2018 annual meeting of stockholders (the “2018 Annual
Meeting”) of SuperValu Inc., a Delaware corporation (the “Company”), and for the approval of a business proposal
to be presented at the 2018 Annual Meeting.
On July 9, 2018, Blackwells issued
the following press release and accompanying letter:
Blackwells Mails Definitive Proxy Materials
to Supervalu Shareholders
Solicits Votes to Elect Six Highly Qualified, Independent Director Nominees at Upcoming Annual Meeting
Urges Shareholders to VOTE the GREEN Proxy
Card to Stop Continued Value Destruction under Current Board
NEW YORK – July 9, 2018 –
Blackwells
Capital LLC (together with its affiliates, “Blackwells Capital” or “Blackwells”), an alternative investment
management firm with an approximate 7.73% ownership interest in Supervalu Inc. (NYSE: SVU) (“Supervalu” or the “Company”),
today announced it has mailed definitive proxy materials and a letter to Supervalu shareholders to solicit votes for the election
of six highly qualified candidates to Supervalu’s Board of Directors (the “Board”) at the upcoming 2018 Annual
Meeting of Shareholders.
Copies of the proxy statement and accompanying
letter, as well as Blackwells’ prior detailed analyses and presentations on Supervalu, are available at www.SaveSupervalu.com.
Jason Aintabi, Managing Partner at Blackwells
Capital, said, “We have lost faith in the current Supervalu Board, but not in Supervalu. Blackwells has attempted to actively
engage with the current Board and management in good faith and offered solutions and skills that would help stem the constant decline
at Supervalu. Each time, our efforts have been rejected, misrepresented, or, in our view, coopted incompetently. The current Board
even refuses to sit down, face-to-face, with our highly qualified, independent nominees, who offer decades’ more relevant
experience than the current directors.
“To protect the investment of all shareholders
and help Supervalu achieve its full potential, Blackwells has recruited and nominated six extremely talented professionals to the
Company’s Board. With their extensive industry and public board experience, we are confident these nominees will better set
Supervalu’s future course and more effectively oversee it. We strongly encourage you to join us in voting for change on the
enclosed GREEN proxy card.”
The full text of the letter accompanying the definitive proxy
statement is below:
July
2, 2018
Dear
Fellow Supervalu Shareholder,
Over
the last ten years, Supervalu has lost more than $5 billion of shareholder value, with its stock declining more than 90%. During
those ten years – and the tenure of five different CEOs – the Company has alternated strategies, including several
complete reversals in strategy, but has yet to find a winning formula.
In
2016 and 2017, the current Board and management team claimed to have implemented yet another sure-fire strategy and turnaround
plan, encapsulated by the less than inspiring, three-prong statement to “retain existing customers,” “sell more
to all customers” and “serve more customers.” Unsurprisingly, the results bear the same discouraging hallmarks
of the past: In Fiscal Year 2018, Supervalu’s stock fell a further 50%.
We
beneficially own 7.73% of Supervalu’s outstanding stock. While we have lost all confidence in Supervalu’s Board, we
believe strongly in Supervalu’s opportunities under the proper leadership.
In
February 2018, we released a detailed strategic plan for the Company. While the mere prospect of our value-creating plan being
implemented has led the stock to rally by more than 40%, we do not believe it is wise to entrust the future of Supervalu to the
same individuals who have failed for so long to create long-term shareholder value. This Board has, in our view, repeatedly shown
that they lack any measure of agility, expertise or independence.
To
protect the investment of all shareholders and help Supervalu achieve its full potential, we have recruited and nominated six
talented professionals to the Company’s Board, with critical experience in food wholesaling, retail grocery, transportation
and logistics, turnaround management and sustainability. In our view, shareholders finally have an opportunity to vote for seasoned
professionals who are qualified to lead Supervalu.
We therefore urge you to vote at
this year’s annual meeting of Supervalu shareholders
using the enclosed
GREEN
proxy card.
Supervalu’s
Share Price Has Underperformed for Over a Decade
Over
any meaningful time period, Supervalu’s stock has performed worse than every relevant index and peer group, and worse than
nearly every company in the Russell 2000 index.
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Share Price Performance
(a)
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1
- Year
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3
- Year
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5
- Year
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10 - Year
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Absolute Performance
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S&P 500
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15
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%
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28
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%
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75
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%
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98
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%
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Russell 2000
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8
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%
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23
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%
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64
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%
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113
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%
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Russell 2000 Consumer Staples
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(3
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%)
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5
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%
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66
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%
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130
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%
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Proxy
Peers
(b)
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(15
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%)
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(14
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%)
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53
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%
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140
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%
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Grocery
Peers
(c)
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(15
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%)
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(21
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%)
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44
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%
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80
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%
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Wholesale
Peers
(d)
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(24
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%)
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(27
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%)
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17
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%
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61
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%
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Supervalu
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(47
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%)
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(80
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%)
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(48
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%)
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(92
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%)
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Source:
Bloomberg. Note: For each time period, peers excludes companies not publicly traded throughout that entire period.
a)
As of February 5, 2018 unaffected date, before Blackwells’ public presentation, adjusted for dividends.
b) Proxy peers consist
of companies used in Supervalu's 2017 proxy statement for assessing relative total shareholder returns: CASY, CORE, IMKTA, SFS,
SPTN, SFM, SPLS, SYY, CHEF, KR, UNFI, VLGEA, WMK, WFM
c)
Grocery peers consists of: KR, SFM, VLGEA, WMK and IMKTA
d) Wholesale peers consists
of: SPTN, UNFI
It
did not have to be this way: Other large food distribution businesses – and retail grocers – have done substantially
better than Supervalu. Among Supervalu’s own self-selected group of 14 peer companies, Supervalu had the worst shareholder
return in Fiscal 2018. Over the last two years, companies as diverse as Sysco, US Foods, Performance Foods, and United Natural
Foods have all generated positive returns, while Supervalu’s shareholders lost hundreds of millions of dollars.
Supervalu’s
Stock Price Decline is a Direct Result of the Wrong Strategy and Poor Financial and Operational Performance
Supervalu’s
earnings per share have declined dramatically since Fiscal 2014 and the Company has eliminated its dividend. By contrast, each
of Supervalu’s grocery peers and each of its wholesale peers have achieved EPS growth, increased their dividends, or both
during that period.
Supervalu is the only company among its peers to have no capital return policy for its shareholders.
Practically
the only thing to increase in recent years at Supervalu is CEO compensation, which has increased more than 20% since Fiscal 2014.
Over the last ten years, Supervalu’s five CEOs have been paid more than $78 million in total. In contrast, Supervalu’s
shareholders have lost more than $5 billion.
Supervalu’s
notable underperformance stems from what we believe are many strategic and operational failures, including:
O
A misguided and unfocused strategy
attempting to manage
the complexities of both wholesale and retail businesses, which has led to managerial and capital allocation issues as well as
clear execution shortcomings;
O
Value-destroying deals
, demonstrated by major strategic
acquisitions such as Albertson’s that were later sold at steep discounts, as well as poorly structured transactions that
created unnecessary tax liabilities, confusing and misleading financial statements and valuation concerns;
O
Repeated recruiting failures
, including the appointment
of five CEOs in a seven-year period, hiring of executives with poor track records and, in our view, questionable business ethics,
and nominating or re-nominating board members who lack relevant experience to assist management in strategy development and others
that had significant conflicts of interest;
O
A misaligned culture and compensation system
that has rewarded
growth and business size, over profitability, operational excellence, and shareholder value creation; and
O
A lack of planning and investment in key operational areas
,
such as logistics, data systems, store maintenance, and promotional deals with key suppliers.
Even
Supervalu’s Board of Directors and management appear to have been surprised by Supervalu’s dramatic underperformance.
Since September 2015, in
every quarter,
except one, Supervalu has been forced to lower the full-year EBITDA guidance it
gave investors at the previous year-end. (Notably, the one non-year-end quarter without a guidance adjustment was disappointing
in other ways, leading to a two-day stock price decline of 19%.)
Though
we believe Supervalu’s directors undoubtedly want to do better, they lack the critical grocery and logistics experience
that would help inform sound strategic judgment and capable oversight. Three of the last four Chairmen of Supervalu, for example,
came from the oil and gas, department store retailing and toy businesses. On this current Board, who can shareholders rely upon
to know Supervalu’s business, customers, suppliers, competitive dynamics and strategic landscape?
Our
Nominees Are Accomplished Executives Who Can Help Supervalu Succeed
If
Supervalu shareholders are to expect a different trajectory for our stock in the future,
we must demand a different Board
.
Blackwells has nominated six talented professionals, having extensive industry and public board experience, whom we believe can
better determine the optimal strategy for Supervalu and more effectively oversee it.
Nominee Name
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Experience
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Executive
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Relevant
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Corp. Board
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Company
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Rick Anicetti
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CEO
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Retail, Grocery
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2 Public, 2 Private
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The Fresh Market, Food Lion; 99 Cents Only Stores; Hannaford Bros. Co.
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Steven Baer
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CEO
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Operational turn-arounds
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1 Public
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High Ridge Partners; Rally Capital Services; Koenig & Strey Financial Services
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Chris Kreidler
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CFO
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Food distribution
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1 Public, 1 Private
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Sysco; C&S Wholesale Grocers; Yum! Brands
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Frank Lazaran
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CEO
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Retail grocery
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1 Public, 1 Private
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Marsh Supermarkets; Winn-Dixie Stores; Randalls Food Markets; Ralphs Grocery Company
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Jim Martell
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CEO
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Transportation & logistics
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2 Public, Multiple Private
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XPO Logistics; FedEx; UPS
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Sandra Taylor
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Senior Executive
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Social responsibility
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2 Public
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Starbucks Coffee; Eastman Kodak; Sustainable Business International
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To
best serve shareholders, the Blackwells nominees are committed to:
ü
Creating a culture of accountability
that is demonstrated
through executive hiring and retention decisions, as well as the executive compensation program;
ü
Allocating shareholder capital in an optimal fashion
, making
decisive and timely decisions about the relative attractiveness of various investment and divestment opportunities, including
business segments, real estate, Supervalu stock, dividends and other available options;
ü
Insisting upon a performance-driven operational approach that
is efficient and sustainable
, eliminating waste (such as the use of the corporate jet for the personal convenience of executives)
and considering the interests of Supervalu’s shareholders in all decisions;
ü
Supporting management
and applying the directors’
considerable industry expertise and contacts, in addition to managerial, operational and strategic experience, to drive operational
excellence and unlock shareholder value;
ü
Eliminating conflicts of interest
that may jeopardize the
Company’s economic success (and the Company’s proprietary information and trade secrets) and ensuring that the highest
standards of integrity are instilled among the Company’s leadership; and
ü
Carefully reviewing, and objectively assessing, all avenues
of value creation
, including those that involve strategic transactions.
The
professionals we have nominated have studied Supervalu’s businesses carefully and have specific suggestions and initiatives
to discuss with shareholders and management. In the coming weeks, Blackwells and its nominees will share more with you about these
plans for Supervalu’s promising future.
We
need better than a Board that only recognizes the Company’s failures when shareholders protest, and then must crib a new
strategy from those same shareholders. The current Board has, in our view, continued to prove itself to be unimaginative, intractable
and lackadaisical stewards of the Company, to the great detriment of Supervalu’s shareholders
We
strongly encourage you to join us in voting for change on the enclosed
GREEN
proxy card.
I
welcome any feedback or questions you may have. Please email me at Supervalu@Blackwellscap.com. For more information, including
our past presentations on the Company, go to SaveSupervalu.com. For any questions about how to vote, please contact our proxy
solicitor, Morrow Sodali, at Blackwells@morrowsodali.com or (800) 662-5200.
Sincerely,
/s/
Jason Aintabi
Managing
Partner
Blackwells
Capital LLC
About
Blackwells Capital
Blackwells
Capital is an alternative investment manager dedicated to global fundamental and special situation investing across capital structures.
Founded in 2016 by Jason Aintabi, its Managing Partner, Blackwells’ investment approach is research-intensive, value-oriented
and concentrated.
Contacts
Investors:
Morrow
Sodali
Mike
Verrechia
800-662-5200
Blackwells@morrowsodali.com
Media:
Gagnier
Communications
Dan
Gagnier / Jeffrey Mathews
646-569-5897
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