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Activist ends board fight at Supervalu, allowing its sale to proceed

July 31, 2018

An activist investor dropped its effort to replace Supervalu Inc.s board of directors, the company said Tuesday, three business days after the company announced its sale to another major food distributor.

Blackwells Capital LLC, a New York investment firm that built a sizable stake in Eden Prairie-based Supervalu over the past year, proposed an alternative slate of board candidates for shareholders to vote upon at the companys Aug. 16 annual meeting.

Both Blackwells and Supervalu were campaigning for shareholder support when the company last Thursday announced its current board had agreed to sell the firm to United Natural Foods Inc., a Rhode Island-based wholesaler that specializes in organic and natural foods.

The end of the dispute removes a key uncertainty that hovered over last weeks sale announcement.

The $2.9 billion deal valued Supervalu shares at a 67 percent premium and well above the pricing that Blackwells built up its stake since last summer. The investment firm had no comment when the deal was announced last week.

Early Tuesday, Supervalu notified investors in a regulatory filing that Blackwells agreed to withdraw its nomination and support Supervalus slate of director candidates. The company said the two sides agreed to chiefly cover their own expenses in the dispute but that Supervalu would pay Blackwells up to $700,000 to cover certain fees and expenses that it did not specify further.

We are pleased to have reached this agreement with Blackwells, as we may now dedicate our full attention to continuing to operate our business and to completing the transaction with UNFI, which delivers a substantial premium and immediate and certain value to our stockholders, Donald Chappel, Supervalus board chairman, said in a statement.

A spokeswoman for Blackwells did not immediately return a request for comment. A website that Blackwells created to reach Supervalu shareholders had been taken down by Tuesday morning.

The companys sale announcement and settlement of the dispute with the activist investor came before investment advisory services weighed in on the proxy battle.

Blackwells for months leveled a barrage of criticism at Supervalus board, chiefly that they presided over strategic failure that resulted in the evaporation of 90 percent of the companys market value since its peak in 2007.

Blackwells proposed that Supervalu sell its retail chains, including Cub Foods, the grocery market share leader in the Twin Cities. United Natural Foods said it will sell Cub and Supervalus other grocery chains soon after its purchase closes, which is expected later this year.

Evan Ramstad 612-673-4241

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