CAMAS, Wash.--(BUSINESS WIRE)--The D3 Family Funds, which own 550,000 shares representing approximately 1.4% of Supervalu Inc. (NYSE:SVU) will vote all of their shares for the six director slate nominated by shareholder Blackwells Capital.
David Nierenberg, founder and managing partner of D3, explained D3’s decision:
“We believe that SVU’s equity has enormous upside potential if SVU can execute its wholesale growth and sale-leaseback strategy with urgency, speed, and accountability. We want to see this upside realized for the benefit of all stakeholders. While SVU’s current board of directors deserves kudos for its diversity, its selection of Mark Gross to lead SVU, and its support for Gross’ strategy, the board has presided over such a massive and long-running decline in SVU’s share price that accountability simply demands changes. If SVU could elect a ten person board, instead of nine, we would be delighted to vote for directors Mark Gross, Eric Johnson, Francesca Ruiz de Luzuriaga, and Mary Winston, plus the Blackwells slate.
We wish we were not forced to choose. In fact, we tried several times to persuade SVU’s management to convene large shareholders for the purpose of selecting a compromise director slate which might have avoided the expense, distraction, and employee morale issues of a proxy fight. We believe that we have the experience, credibility and connections in the governance community to have played a constructive role in such a process. But SVU did not seize the opportunity to find the middle ground, and now there is a proxy fight.
Meanwhile, it is becoming increasingly apparent that the combination of growing SVU’s wholesale grocery business organically and inorganically, divesting most of the company’s retail grocery stores, and selling and leasing back its distribution centers to pay down debt has the potential to catapult SV’s share price. With the right board in place, with the right urgency, accountability, and serious skin in the game, we believe that SVU management could have the time and the support it needs to execute that strategy. But if the existing board, which owns very little purchased equity, and which has presided over a huge reduction in SVU’s share price, is permitted to remain in place, we believe there is substantial risk that a hostile acquirer could swoop in with a $24 per share offer and steal the upside for itself. That would be a shame for SVU’s existing stakeholders, because our analysis convinces us that the company’s upside potential over the next several years could be more than triple where the share price languishes today.”