MINNEAPOLIS, MN - After months of tensions between activist investor Blackwells Capital and management, SuperValu seems to be nearing a referendum of sorts, with shareholders expected to elect a new Board of Directors on August 16, 2018. In anticipation of the election, the company sent a letter to its shareholders this week urging investors to vote for “all of SuperValu’s highly qualified Directors” and to reject Blackwells’ recent nominees.
“At SuperValu’s upcoming Annual Meeting of Stockholders on August 16, 2018, you will be asked to make important decisions regarding the composition of the Company’s Board and the future structure of your Company, which we believe will impact the value of your investment,” the company noted in its letter. “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 to seize control of your Company, without paying a premium to all stockholders, is highly disproportionate to its actual ownership stake in SuperValu.”
The letter goes on to state that SuperValu believes Blackwells’ plan to present “significant risk to the important progress the Company is making in executing its ongoing strategic plan.”
“Any claim Blackwells could make to act on behalf of SuperValu's stockholders is belied by the fact that, through short sales of call options and the purchase of put options, Blackwells’ exposure to the Company is substantially less than it represents,” the letter goes on. “In fact, while Blackwells claims that it has a 7.7 percent ownership interest in SuperValu, analysis of the detailed information it has provided in its filings shows that, taking into account its various options contracts, Blackwells’ exposure to the Company’s shares is materially lower than 7.7 percent.”
The company goes on to detail the various ways in which SuperValu “has taken major steps to position SuperValu as the grocery wholesale supplier of choice, while also ensuring that certain of the Company’s well-positioned retail assets are strategically used to add value to the overall business,” achievements including:
- The completion of the sale of Save-A-Lot for $1.3 billion in December of 2016
- The “dramatic” turnaround of SuperValu’s wholesale business, which added $5 billion in sales on a run-rate basis to the Wholesale business in just two years—a growth rate of over 60 percent
- Monetizing a significant portion of our owned real-estate portfolio through the sale and leaseback of eight distribution centers, totaling nearly six million square feet of space—a transaction expected to generate net proceeds of approximately $445 million
- The reduction of SuperValu’s retail footprint, the completion of the sale of a majority of our Farm Fresh retail stores and pharmacy assets for a total of $53 million, and the selling a minority stake in a multi-store Cub Foods LLC that generated proceeds of $14 million
The company also urged shareholders to vote for its proposal to restructure SuperValu as a holding company, a step the company said it expects to "enhance [its] competitive position within the changing food industry, strengthen [its] balance sheet, and most importantly, to position the company to deliver long-term value to all stockholders."
To read SuperValu’s letter in its entirety, click here.
