On June 12, Supervalu announced that it proposed to reorganize the company’s corporate structure by converting it to a holding company to facilitate its strategic transformation, among other benefits to stockholders. The proposal will further separate the company’s retail and wholesale operations.
The move is expected to facilitate the company’s strategic plan to sell some of its retail assets, segregate liabilities to their respective business segments and increase flexibility. The company announced that if implemented tax efficiently, it could generate about $300 million of cash tax benefits during the next approximately 15 years.
“We have been executing a strategic transformation of our business over the last two years to become the wholesale supplier of choice for grocery retailers across the US, while also executing initiatives to deliver long-term stockholder value,” said Mark Gross, Supervalu’s President and CEO. “The proposed holding company structure is another significant and important undertaking by our team that would support and advance our transformation by further separating our wholesale and retail operations in a tax efficient manner,” Gross said.
Supervalu has been under tremendous pressure from investors Blackwells Capital recently who urged the company to sell over a third of its retail stores and real estate to combat Supervalu’s stock that was trending downwards. Blackwells even released a least of six nominees for Supervalu’s nine-person board in February. As of May 29, 2018, Blackwells increased its stake in Supervalu to 7.3 percent.