February 7, 2018

Blackwells Capital demands Supervalu break up and sell, starts board fight

After sending the Board of Directors at Supervalu a heated letter in October 2017, Blackwells Capital has followed it up with another severe communication on Feb. 6 stating: “Current Supervalu directors lack the imagination necessary to explore alternative strategies and options for maximizing shareholder value” which is “hardly surprising given the members’ backgrounds – only one of Supervalu’s nine current directors has any direct retail operational experience.”

Blackwell, which owns 4.35 percent of Supervalu stock, recommends a separation of the company’s wholesale and retail divisions. The wholesale business, which provides about 75 percent of Supervalu’s revenue and nearly all of its operating profit, recommends it be shopped by parties such as SpartanNash, C&S or United Natural Foods. Calling the company’s performance abysmal, Blackwells proposed to submit nominations for election of directors to the board in connection with the company’s 2018 annual shareholder meeting.

In response, on Feb. 7, Supervalu issued a communication stating it was confident of ongoing efforts to transform the company. Supervalu’s statement pointed out that sales from Supervalu’s wholesale operations are now approximately 75 percent of its total annual sales, up from approximately 44 percent only two years ago. Additionally, it had added more than $5 billion to bring its core wholesale business to nearly $13 billion, was executing a wholesale strategy that was showing results by gaining new customers and retaining and doing more business with existing customers.  

“Despite our efforts to reach a constructive path forward and to discuss overlapping objectives, Blackwells has decided to threaten an unnecessary and counterproductive proxy contest,” a Supervalu spokesperson stated.

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