Supervalu Inc., the third-largest U.S. grocery chain, sank the most since at least 1980 after saying it will review strategic alternatives for the business and suspended its dividend.
Supervalu tumbled (SVU) 44 percent to $2.99 at 10:08 a.m. in New York after earlier touching $2.76 for the biggest intraday decline since July 29, 1980, the earliest data compiled by Bloomberg. The Eden Prairie, Minnesota-based company’s shares had fallen 35 percent this year through yesterday, putting it on course for a fifth straight annual drop.
The company, which last month announced layoffs in its Albertsons unit in California and Nevada, plans to accelerate price reductions and cut costs by an additional $250 million over the next two years, it said in a statement yesterday. It has retained Goldman Sachs Group Inc. and Greenhill & Co. to review its options, it said.
Supervalu, which operates the Shaw’s and Save-A-Lot chains, hasn’t turned an annual net profit in three years amid competition from Wal-Mart Stores Inc. (WMT) (WMT) and Kroger Co. (KR) (KR) Its valuation stands at 4 times earnings before interest, taxes, depreciation and amortization, making it the cheapest among its peers and prompting investors and analysts to view it as a potential acquisition target.
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