Investors Buy Albertsons; Plans Are Foggy Page 1 of 1

Investors buy Albertsons; plans are foggy Page 1 of 1

Publication: The Colorado Springs Gazette; Date:2006 Jan 24; Section:Section A; Page Number: 1 Investors buy Albertsons; plans are foggy

By JIM BAINBRIDGE THE GAZETTE

Albertsons’ future in Colorado is suddenly uncertain after the grocery-store chain was sold Monday to multiple investors for $17.4 billion in cash, stock and debt. Minneapolis-based Supervalu and the drugstore chain CVS Corp. led an investment group that obtained the lion’s share of stock, allowing Supervalu to double in size and become the nation’s second-largest traditional grocerystore operation. The buyers of the Colorado stores are a real estate investment group led by Cerberus Capital Management of New York. They will acquire 655 stores in the Rocky Mountain region, Dallas/Fort Worth, California, Florida and Southwest. The stores are Albertsons and Super Saver stores, as well as some combination grocery/drug stores. Cerberus will also buy 26 Supervalu stores in the Chicago area to ease possible anti-trust concerns. Initial indications from Cerberus are that the group plans to operate the grocery stores under the Albertsons name. But the stores they acquired have been characterized as “underperforming,” and there is a chance that at least some of the properties could be sold off. The group includes real estate partners known for purchasing failed properties from retailers and redeveloping the sites. Cerberus’ investment strategy traditionally has been to keep companies from flaming out, often injecting capital into the retail ventures it acquires. Its holdings include a 49 percent share in Japanese bank Aozora, United States tech firms ICG Communications and SSA Global Technologies and cable operator Galaxy Cable. Cerberus paid about $2.3 billion for MeadWestvaco’s paper business last year, forming New-Page Corp. of Dayton, Ohio. For now, shoppers and employees must wait. “The international office of the United Food and Commercial Workers union is meeting with them now to find out their intentions,” Dave Minshall, UFCW Local 7 spokesman in Denver, said, referring to Cerberus. “It is our hope that the company continues to operate the stores under the Albertsons name. We think that’s best for the company, best for our customers and that a smart operator could do very well with them.” There are 57 Albertsons in Colorado and Wyoming, with about 2,000 employees. Colorado Springs has six grocery stores and two warehouses. Albertsons stockholders will get about $26.29 in cash and Supervalu stock for each Albertsons share. The buyers will assume about $7.7 billion in debt. Only Kroger Co. will be larger once Supervalu takes over 1,124 stores under the Albertsons, Acme Markets, Bristol Farms, Jewel-Osco and Shaw’s Supermarkets banners. The expanded Supervalu will have 2,656 stores nationwide. Supervalu will pay about $6.3 billion in stock and cash and assume about $6.1 billion in Albertsons debt for the 1,124 stores and in-store pharmacies under the Osco and Sav-on brands. CVS of Woonsocket, R.I., is purchasing about 700 standalone Sav-on and Osco Drugstores and a distribution center in La Habra, Calif., for $2.93 billion in cash. It will also acquire real estate interests in the drug stores for $1 billion. The Associated Press contributed to this report.

INVESTORS

The partnership of investors that are purchasing the Albertsons properties in Colorado: - Cerberus Capital Management, L.P.: an investment firm that injects capital into retail ventures facing distress. - Kimco Realty: a real estate investment trust. It specializes in the acquisition, development and management of shopping centers; owns about 1,000 properties in 43 states, including Woodmen Valley Shopping Center and Spring Creek Shopping Center in Colorado Springs. - Lubert-Adler Partners: a real estate investment firm. Its strategy is to acquire property from retailers for redevelopment. Its past acquisitions include properties of Montgomery Ward, Service Merchandise and Mervyns. - Klaff Realty: a real estate investment company. It acquires, redevelops and manages office and retail property throughout the United States. - Schottenstein Stores Corp.: chain of discount furniture stores. SOURCE: GAZETTE RESEARCH

http://daily.gazette.com/APA26300/PrintArt.asp?SkinFolder=GazetteA 2/29/2008