Board Recommends Stockholders Vote “FOR ALL”
Nine of Supervalu’s Highly Qualified, Experienced Directors and
“FOR” the Holding Company Proposal on the WHITE Proxy Card
SUPERVALU INC. (NYSE:SVU) today announced that it has mailed a
letter to its stockholders in connection with the Company’s
upcoming 2018 Annual Meeting of Stockholders, to be held on August
16, 2018.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20180718005364/en/
(Graphic: Business Wire)
Highlights of the letter include:
- SUPERVALU’s Board of Directors has been
– and will continue to be – a significant agent of change to
improve SUPERVALU’s performance and deliver enhanced value to our
stockholders.
- The SUPERVALU Board has the leadership
and grocery industry expertise necessary to continue executing our
long-term strategy. Overall, the Board benefits from a breadth of
skills, expertise and knowledge, as well as a mix of new and
tenured directors with diverse perspectives.
- Each member of the Board has played a
critical role in developing and overseeing the ongoing successful
execution of SUPERVALU’s transformation, which has been underway
since 2015 and is already delivering meaningful results.
- The Board is moving forward with its
transformation strategy by reorganizing the Company into a holding
company structure, which will organize the business in an
operationally efficient and strategic manner, while facilitating
plans to sell certain retail assets, increasing strategic, business
and financial flexibility and potentially generating significant
cash tax benefits of approximately $300 million over the course of
the next approximately 15 years.
- In stark contrast, Blackwells’ director
nominees would bring no new or additive expertise to your Board.
Electing Blackwells’ nominees would disrupt much of the progress
SUPERVALU has made in establishing a strong Board and advancing the
Company’s transformation.
The full text of the letter is as follows:
July 18, 2018
Dear Fellow Stockholder:
We are writing to encourage you to elect our highly qualified
directors at SUPERVALU’s upcoming Annual Meeting of Stockholders
(“Annual Meeting”) to be held on August 16, 2018. Under the
leadership and direction of your Board, SUPERVALU continues to take
decisive actions to fundamentally transform the Company.
Your vote is very important. Blackwells Capital, a New
York-based alternative investment firm, is trying to seize control
of your Board by proposing to replace six of nine directors.
Blackwells’ attempt for majority control of the Board, without
paying a premium to all stockholders, is highly disproportionate to
its purported ownership stake in SUPERVALU. In fact, through
hedging strategies, Blackwells’ exposure to the Company is
substantially less than it represents. While Blackwells claims that
it has a 7.7% ownership interest in SUPERVALU, analysis of the
detailed information it has provided in its filings shows that
Blackwells’ exposure to the Company’s shares is significantly
lower.1
_______________________________
1 Based on Blackwells’ definitive proxy
statement filed on June 29, 2018, Blackwells holds 5.3% of the
Company’s outstanding shares outright but due to its multiple long
and short call and put option positions it only has full economic
exposure on 1.1% of the Company’s outstanding shares.
We urge you to protect the value of your investment and vote
“FOR ALL” of the Company’s director candidates using the
enclosed WHITE proxy card.
SUPERVALU’S DIVERSE BOARD IS HIGHLY
QUALIFIED AND EXPERIENCED
Each member of your Board of Directors has played a critical
role in developing and overseeing the successful execution of
SUPERVALU’s transformation and, as illustrated below, the Board has
an in-depth experience across a broad spectrum of relevant
fields.
[See Image #1]
Additionally, we have made Board refreshment a
priority, and as a result we have appointed new directors who are
playing an integral role in overseeing SUPERVALU’s transformation.
Two of our directors have joined the Board in the past
approximately two years, six of our nine directors have served on
the Board for five years or less, and a new independent Chairman
was appointed in July 2017.
In order to better inform you about your Board’s qualifications
and objectives, we invited our independent Chairman, Don Chappel to
share his perspectives on key stockholder concerns.
Q: Why is this the right Board to lead SUPERVALU?
- Your Board has been – and will continue
to be – a significant agent of change to improve SUPERVALU’s
performance and deliver enhanced value to our stockholders. We have
an independent Board that benefits from a breadth of skills,
expertise and knowledge as well as a mix of new and longer-tenured
directors who have diverse perspectives.
- We see substantial value in a regularly
refreshed Board to ensure we have the right mix of diversity,
independence and experience to position SUPERVALU for future
success. In 2016, we appointed Mark Gross, our CEO, and Mary
Winston to the Board. Both Mark and Mary have strong backgrounds in
grocery retail and distribution, finance and M&A, which make
them critically valuable as the Company continues its ongoing
strategic transformation.
- Over the past five years, we have also
reinforced the depth of experience and skills of the Board in order
to best address the evolving grocery industry. Specifically, Eric
Johnson and Francesca Ruiz de Luzuriaga have brought significant
distribution and retail experience, and Mathew Pendo and Frank
Savage provide financial and M&A expertise.
- At the same time, Irwin Cohen and
Philip Francis are two longer-serving directors who have been a
strong presence on the Board and have played key roles in the
Company’s evolution throughout the years in a grocery industry that
has undergone tremendous change.
- I was appointed to the non-executive
Chairmanship in 2017. Through my experience as an executive across
several industries, including those in disruption, as well as my
previous Board experience, I think I have brought sound and steady
leadership to a Board that is committed to executing an important
transformation.
Q: Can you discuss the strategic transformation that is
underway at SUPERVALU?
- We began working on, and publicly
announced, an ambitious strategic transformation in 2015, long
before Blackwells first contacted members of the SUPERVALU
management team or even purchased a single share of our stock.
In early 2016, we appointed Mark Gross, a wholesale industry leader
with a 20-year track record of delivering growth, as President, CEO
and Director. Since that time, your Board has taken decisive
measures to fundamentally shift the direction of the Company and
return to our roots by becoming the wholesale supplier of choice
for grocery retailers across the U.S.
- As a crucial early step in the
strategic transformation of the business, your Board pursued the
separation and ultimate sale of our Save-A-Lot banner, reducing the
Company’s debt with the $1.3 billion in proceeds to enable
management to execute our transformation initiatives and pursue
important strategic acquisitions and growth opportunities.
- Our transformation strategy is already
producing results across each facet of our business. Through
strategic acquisitions and organic growth, we have increased
Wholesale to 80% of total company net sales in fiscal 2018 from
just 44% two years ago. We have taken important steps to reduce our
retail footprint, while strategically investing in high-performing
assets and opportunities with the highest potential for returns
within our Retail business. Additionally, we have monetized a
significant portion of our owned real estate portfolio through the
sale and leaseback of eight distribution centers, which will
generate net proceeds of approximately $445 million and allow us to
further reduce debt.
Q: What is the Company’s greatest challenge and how is the
Board addressing it?
- We face two significant challenges – a
highly competitive grocery environment, including from recent and
ongoing consolidation within the grocery industry, and, like many
industries, the expansion of e-commerce and online grocery
retailers. Your Board and management team anticipated these
challenges and took proactive steps to ensure SUPERVALU is
positioned to capitalize on these industry shifts.
- At the foundation of these steps is our
ongoing transformation to become a Wholesale business, and to
streamline our Retail presence. We have pursued and completed
significant acquisitions – Unified Grocers and AG Florida – that
have expanded our customer base, geographic footprint, product
offerings and expertise. We believe these acquired companies will
allow us to even better meet the evolving demands and preferences
of our customers as they serve some of the country’s most exciting
and progressive Hispanic and multiple other ethnic formats,
specialty, gourmet, natural/organic, price impact and traditional
stores. We recognize that industry consolidation will continue, and
the Board has taken steps to ensure that SUPERVALU is in a position
to pursue strategic and opportunistic M&A and benefit from this
trend. These initiatives include significantly reducing the
Company’s debt to enhance balance sheet flexibility.
- We are also taking steps to compete
digitally. We recently entered into a multi-year reseller agreement
with Instacart, which creates a new professional services offering
and expands our digital capabilities. Through this, SUPERVALU can
offer the benefits of online shopping and delivery services to more
than 3,000 independent retail stores supplied by SUPERVALU as well
as other retailers across the U.S. in the over 240 metro areas
where Instacart operates.
Q: How does the Board approach capital allocation?
- Our directors are fully engaged in
overseeing the Company’s financial objectives and honoring our
commitment to maximizing value for all stockholders. We have a
wealth of directors with deep financial and accounting backgrounds,
including Irwin Cohen, Mathew Pendo, Frank Savage, Mary Winston and
Francesca Ruiz de Luzuriaga, as well as myself. Under our
leadership and guidance, the Company has significantly reduced its
debt, improved its balance sheet and increased our flexibility to
pursue strategic capital investments to drive Wholesale
growth.
- Capital allocation is a key priority
for your Board. We continue to prudently and actively manage the
Company’s balance sheet by paying down debt and improving the
funding of our pensions while also supporting SUPERVALU’s growth
and transformation initiatives.
- Blackwells has suggested certain
capital allocation initiatives, including a commitment to pay a
dividend and the creation of a share repurchase plan. The Board
does not believe either initiative is advisable at this time given
our ongoing commitment to utilizing cash to reduce debt, and the
importance of maintaining balance sheet flexibility to pursue
strategic and opportunistic M&A in a consolidating
environment.
Q: How will the Board’s proposal to establish a holding
company structure maximize value for stockholders?
- Our recent proposal to reorganize the
Company’s corporate structure (referred to in our proxy
statement/prospectus as the “Holding Company Proposal”) further
advances the Company’s strategic transformation. Specifically, the
new holding company structure will allow us to achieve our
strategic transformation plan in a tax efficient manner that may
facilitate the ability to utilize a material portion of SUPERVALU’s
capital loss carryforward, and which could generate approximately
$300 million of cash tax benefits for the Company over the next
approximately 15 years. This, in turn, will strengthen our balance
sheet and most importantly, position the Company to deliver
long-term value to all stockholders.
BLACKWELLS’ NOMINEES DO NOT BRING ANY SKILLS
THAT ARE NOT ALREADY WELL REPRESENTED ON YOUR BOARD
The SUPERVALU Board has the leadership and industry expertise
necessary to continue executing our long-term strategy.
Importantly, Blackwells’ director nominees would bring no new or
additive expertise to your Board. Have a look for yourself:
[See Image #2]
Conversely, electing Blackwells’ nominees would erase much of
the progress SUPERVALU has made in establishing a diverse group
whose backgrounds allow them to bring fresh perspectives to this
already strong Board.
YOUR BOARD OF DIRECTORS URGES STOCKHOLDERS
TO VOTE “FOR ALL” SUPERVALU DIRECTORS USING THE WHITE PROXY
CARD TODAY
The choice is clear – the right Board, leadership and strategy
are already in place. Our transformation plan is working and we
continue to make significant progress towards delivering strong
results. Do NOT allow Blackwells to disrupt and destroy
our progress and momentum.
Please use the enclosed WHITE proxy card today to vote “FOR
ALL” nine of SUPERVALU’s highly qualified directors and the
Holding Company Proposal. Simply follow the easy instructions to
vote by telephone, by Internet or by signing, dating and returning
the WHITE proxy card in the postage-paid envelope provided.
Your vote “FOR” our directors and the Holding Company
Proposal will help ensure that you, as a SUPERVALU stockholder,
have a Board focused on sustaining our positive momentum and
creating lasting value for all stockholders.
We appreciate your support.
Sincerely,
Donald R. Chappel
Chairman of the Board
Mark Gross
President and Chief Executive Officer
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual
information, the matters set forth in this communication,
particularly those pertaining to SUPERVALU’s efforts and
initiatives to transform its business and assets and SUPERVALU’s
expectations regarding the potential impact of those efforts and
initiatives on its future operating results, and other statements
identified by words such as “estimates” “expects,” “projects,”
“plans,” “intends,” “outlook” and similar expressions are
forward-looking statements within the meaning of the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including the ability to continue to transform our business and to
execute on our initiatives on a timely basis or at all, the ability
to recognize the expected benefits of the initiatives, the
potential for disruption to our business during the process, the
ability to execute on the Holding Company Proposal on a timely
basis or at all, the ability to recognize the expected benefits of
the reorganization, the amount and timing of any cash tax benefits
resulting from the reorganization being different than expected,
our ability to complete a sale of certain of our retail assets to
third parties or another strategic transaction prior to the
expiration of our capital loss carryforward in February 2019, the
potential for disruption to our business during the process, the
ability to effectively manage organization changes during the
pendency of or following our business transformation including any
reorganization and related transactions, the requirement that we
offer to repurchase certain indebtedness of the Company and obtain
certain third-party consents as a result of the reorganization and
costs and expenses associated with doing so, and other risk factors
relating to our business or industry as detailed from time to time
in SUPERVALU’s reports filed with the SEC. You should not place
undue reliance on these forward-looking statements, which speak
only as of the date of this communication. For more information,
see the risk factors described in SUPERVALU’s Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, proxy
statement/prospectus for the 2018 Annual Meeting of Stockholders
and other filings with the SEC. Unless legally required, SUPERVALU
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
PROTECT YOUR INVESTMENT!
PLEASE VOTE TODAY ON THE WHITE
PROXY CARD!
If you have questions, need assistance in
voting your shares, or wish to change a prior vote, please
contact:
INNISFREE M&A INCORPORATED
Stockholders Call Toll-Free:
(877) 456-2510
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and
retailers in the U.S. with fiscal 2018 annual sales of
approximately $14 billion. SUPERVALU serves customers across the
United States through a network of 3,437 stores composed of 3,323
wholesale primary stores operated by customers serviced by
SUPERVALU’s food distribution business and 114 traditional retail
grocery stores in continuing operations operated under three retail
banners in three geographic regions (store counts as of February
24, 2018). Headquartered in Minnesota, SUPERVALU has approximately
23,000 employees (in continuing operations). For more information
about SUPERVALU visit www.supervalu.com.
Important Stockholder Information and Where You Can Find
It
SUPERVALU has filed with the SEC a definitive proxy
statement/prospectus and accompanying definitive WHITE proxy card
in connection with its 2018 Annual Meeting of Stockholders. The
definitive proxy statement/prospectus contains important
information about SUPERVALU, the 2018 Annual Meeting of
Stockholders and related matters.
In connection with the Holding Company Proposal, SUPERVALU
Enterprises, Inc., the entity that will be the new holding company
following completion of the reorganization (“SUPERVALU
Enterprises”), has filed with the SEC a Registration Statement on
Form S-4 (Registration Statement No. 333-225586) that includes the
definitive proxy statement of SUPERVALU and a prospectus of
SUPERVALU Enterprises, as well as other relevant documents
concerning the proposed reorganization. The Holding Company
Proposal will be submitted to SUPERVALU’s stockholders for their
consideration. This communication does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval.
INVESTORS AND STOCKHOLDERS ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING THE
DEFINITIVE PROXY STATEMENT/PROSPECTUS, THE ACCOMPANYING WHITE PROXY
CARD AND ANY OTHER RELEVANT SOLICITATION MATERIALS WHEN THEY BECOME
AVAILABLE BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT
INFORMATION.
A free copy of the definitive proxy statement/prospectus, as
well as other filings containing information about SUPERVALU and
SUPERVALU Enterprises, is able to be obtained at the SEC’s Internet
site (http://www.sec.gov). You are also able to obtain these
documents, free of charge, from SUPERVALU at
http://www.supervaluinvestors.com or by directing a request to
SUPERVALU INC., P.O. Box 990, Minneapolis, Minnesota 55440,
Attention: Investor Relations, telephone (952) 828-4000.
Participants in the Solicitation
SUPERVALU, its directors and certain of its executive officers
and employees may be deemed to be participants in the solicitation
of proxies from SUPERVALU’s stockholders in connection with the
matters to be considered at its 2018 Annual Meeting of
Stockholders. Information regarding the names of SUPERVALU’s
directors and certain of its executive officers and employees and
their respective interests in SUPERVALU by security holdings or
otherwise is set forth in SUPERVALU’s proxy statement/prospectus
for the 2018 Annual Meeting of Stockholders filed with the SEC.
The following table sets forth information as of June 21, 2018
concerning beneficial ownership of SUPERVALU’s common stock by each
director and each of the executive officers named in the Summary
Compensation Table that is included in SUPERVALU’s proxy statement
for the 2018 Annual Meeting of Stockholders and for all of our
current directors and executive officers as a group. The definition
of beneficial ownership for purposes of the following information
includes shares over which a person has sole or shared voting power
or dispositive power, whether or not a person has any economic
interest in the shares. The definition also includes shares that a
person has a right to acquire currently or within 60 days.
Name of Beneficial Owner
Amount and Nature of Beneficial
Ownership (1)(2)
Percent of Class Donald R. Chappel 55,449 * Irwin S. Cohen
36,640 * Philip L. Francis 30,435 (3) * Eric G. Johnson 27,033 *
Mathew M. Pendo 12,061 * Francesca Ruiz de Luzuriaga 10,547 * Frank
A. Savage 23,226 * Mary A. Winston 8,642 * Mark Gross 174,227 * Rob
N. Woseth 84,156 * James W. Weidenheimer 13,069 * Michael C.
Stigers 63,671 * Randy G. Burdick 83,072 * Bruce H. Besanko 32,791
* All current directors and executive officers as a group (15
persons) 637,364 1.6% * Less than 1% (1) All persons
listed have sole voting and investment power with respect to all of
the shares listed except the following non-employee directors who
have sole voting power, but no investment power, over shares held
in the SUPERVALU INC. Directors’ Deferred Compensation Plan (2009
Restatement), as follows: Mr. Chappel, 54,020 shares; Mr. Cohen,
36,640 shares; Mr. Francis, 29,578 shares; Mr. Johnson, 27,033
shares; Mr. Pendo, 12,061 shares; Ms. Luzuriaga, 9,833 shares; Mr.
Savage, 23,226 shares; and Ms. Winston, 8,642 shares. (2)
Includes shares underlying options exercisable or exercisable
within 60 days of June 21, 2018, as follows: Mr. Gross, 167,760
shares; Mr. Woseth, 73,783 shares; Mr. Weidenheimer, 5,603 shares;
Mr. Stigers, 51,450 shares; Mr. Burdick, 72,221 shares; and all
current directors and executive officers as a group, 378,588
shares. (3) Includes 857 shares held in a trust for which
Mr. Francis and his spouse serve as the trustees.
Additional information regarding the interests of these
participants in any proxy solicitation and a description of their
direct and indirect interests, if any, by security holdings or
otherwise, is also included in the definitive proxy
statement/prospectus for the 2018 Annual Meeting of Stockholders,
the accompanying definitive WHITE proxy card and other relevant
solicitation materials and in Form 3s and Form 4s filed by
SUPERVALU’s directors and executive officers after the date of the
proxy statement. These documents (when they become available), and
any and all documents filed by SUPERVALU with the SEC, may be
obtained by investors and stockholders free of charge on the SEC’s
website at www.sec.gov.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180718005364/en/
SUPERVALU INC.For Investors:Steve Bloomquist,
952-828-4144steve.j.bloomquist@supervalu.comorFor Media:Jeff
Swanson, 952-903-1645jeffrey.s.swanson@supervalu.comorJoele Frank,
Wilkinson Brimmer KatcherJames Golden / Leigh
Parrish212-355-4449
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