Albertson's announces definitive agreement to sell company

25/01/06 Albertson's, Inc. has announced that it has entered into a definitive agreement to sell the entire company to a consortium of investors for a total transaction value of approximately $17.4 billion in cash, stock and assumed debt, including the settlement of the Albertsons Hybrid Income Term Security units. The value of the transaction to Albertsons' shareowners is approximately $26.29 per share, as described below, representing a premium of approximately 27 percent based on the company's closing share price of $20.73 on September 1, 2005, the day before it announced it would explore strategic alternatives.

Members of the consortium involved in the transaction are SUPERVALU Inc., CVS Corporation, and an investor group led by CERBERUS CAPITAL MANAGEMENT, L.P. that also includes Kimco Realty, Schottenstein Realty, Lubert-Adler Partners, and Klaff Realty, LP.

Under the terms of the agreement, Albertsons shareholders will receive $20.35 in cash and a fixed exchange ratio of 0.182 shares of SUPERVALU stock for each Albertsons share, on a fully diluted basis. The value of the SUPERVALU stock, based on a $32.65 average stock price using the 20 day trading average of the closing price of the SUPERVALU stock through January 20, 2006, is $5.94. The $20.35 in cash plus $5.94 in SUPERVALU stock yields a total consideration per share of $26.29. Albertsons shareholders would have an equity ownership of approximately 35 percent of the substantially enlarged SUPERVALU upon completion of the transaction.

Assets and operations will be divided by consortium members as follows:

SUPERVALU will acquire approximately 1124 operating stores and 100 percent of the support operations for Acme Markets, Bristol Farms, Jewel-Osco, Shaw's, and Star Markets, as well as all Albertsons banner stores in Idaho, Southern Nevada, Utah, Southern California, and the Northwestern US. Also included are all of the combo-store pharmacies, which operate under the Osco and Sav-on banners. These assets combined with SUPERVALU's existing assets would create a strong new company with 2,656 stores in 48 states plus the District of Columbia and approximately $44 billion in revenues, making it the second largest supermarket company in America.

CVS will acquire 100 percent of the stand-alone drugstore business, which includes approximately 700 freestanding stores as well as a distribution center located in La Habra, California. CVS will also acquire Albertson's ownership interests in the drug store real estate and intends to sell these interests at or soon after closing in a sale-leaseback transaction. The Sav-on and Osco banners are not part of the sale to CVS. All stand-alone drugstores included in the transaction will be re-bannered as CVS.

The CERBERUS-led consortium will acquire 655 operating stores and 100 percent of the distribution centers and offices in Albertsons' Dallas/Fort Worth division, and in the Florida, Northern California, Rocky Mountain and Southwestern regions. These stores operate under the Albertsons and Super Saver banners and also include the combo-store pharmacies under the Osco and Sav-on banners. Cerberus has also purchased 26 Cub Stores from SUPERVALU in the Chicago area for an undisclosed amount.

SUPERVALU would provide the necessary transition services to all consortium members for an unspecified length of time.

The transaction is subject to approval by Albertsons and SUPERVALU shareholders as well as customary regulatory approvals. It is expected to close in mid-2006.

Goldman Sachs & Co. and The Blackstone Group L.P., served as financial advisors and Jones Day served as legal advisor to Albertsons. Sullivan & Cromwell, LLP served as advisors to Albertsons Board of Directors.

Albertsons is one of the world's largest food and drug retailers. The Company's divisions and subsidiaries operate approximately 2,500 stores in 37 states across the U.S. and employ approximately 240,000 associates. Its banners include Albertsons, Acme, Shaw's, Jewel-Osco, Sav-on Drugs, Osco Drug, and Star Market, as well as Super Saver and Bristol Farms, which are operated independently.

http://www.albertsons.com/abs_news/latest/default.asp?id=21962