Ira Lubert, who co-manages more than $10 billion (including $1 billion in PA state pension money) through Lubert-Adler (real estate), LLR (buyouts) and other funds based around his 30th St. headquarters, and is also leading owner of the Valley Forge Casino Resort, is part of a group that made a killing buying supermarkets in the mid-2000s, and might be weighing an offer for the debt-laden Minnesota-based supermarket conglomerate SuperValu, whose Acme Markets trails Shop-Rite (and probably Giant, as reader Tom Abrams notes) as the dominant Philadelphia-area grocer.
Writes the Wall St Journal here: Investors led by Cerebrus Capital Partners (former owner of GMAC and Chrysler, among others) are mulling a $5 billion debt-and-equity offer for SuperValu, reassembling a team like the buyout/real estate group that bought part of the Albertson's grocery group in 2005, and has since quintupled the value of that investment. KKR is considering a separate bid for SuperValu's Save-a-Lot discount chain, which expanded after the 2008 recession but has since been closing stores.
"Cerberus, co-founded by Chief Executive Stephen A. Feinberg, is weighing a more-ambitious bid" for all of SuperValu and has started "talks to line up $4 billion to $5 billion in debt, with the notion of investing another $800 million to $900 million in equity to take Supervalu private," says an unnamed Journal source. SuperValu says only that it's in "active dialogue" with unnamed potential buyers.
"In 2006, the Cerberus-led group acquired more than 650 underperforming Albertsons stores as part of a larger deal " in which "Supervalu acquired more than 1,100 Albertsons grocery stores for $3.8 billion in cash and $2.5 billion of stock" and what's now
CVS Caremark Corp. "paid about $4 billion" for the chain's pharmacies.
"Cerberus and its partners, publicly traded Kimco Realty Corp., Chicago's Klaff Realty LP, Philadelphia's Lubert-Adler Partners LP and Schottenstein Stores Corp. of Columbus, Ohio, paid about $1.1 billion [1/3 equity, the rest debt] for what some considered the dregs of the Albertsons chain... In August, Kimco Chief Financial Officer Glenn Cohen... [said Kimco] has seen a return of nearly five times on the $51 million it paid for a 15% stake the company, which the group called Albertson's LLC. The other partners have fared similarly, according to people familiar with the deal... Milton Cooper, Kimco's executive chairman, said he anticipated investing again in distressed grocers... where there may be real estate that can be available at attractive prices."
"Supervalu, with $36 billion in sales last year, owns the real estate at about 40% of its 1,100 traditional supermarkets, which have big presence in major markets, the company said in its most recent annual report. That ownership level would allow a new owner to pursue a real-estate focused strategy, replacing unprofitable stores with tenants more popular with shoppers." No immediate comment from Lubert.