(Reuters) - Cerberus Capital Management is working on a takeover bid for troubled supermarket operator Supervalu Inc (SVU.N) and has held talks with lenders to line up financing, according to three sources familiar with the matter.
Debtwire earlier reported that the private equity firm was pitching a handful of banks to arrange $4 billion to $5 billion in debt financing to back a bid, sending Supervalu's shares up more than 40 percent on Monday.
JPMorgan Chase & Co (JPM.N) and Bank of America (BAC.N) are among the banks considering a syndicate, Debtwire said. Both banks declined to comment. Cerberus did not immediately respond to a request for comment.
Supervalu, operator of the Jewel-Osco, Save-A-Lot and Albertsons chains, declined to comment beyond what it said last week: It has received several indications of interest and was in "active dialogue" with several parties.
A Supervalu spokesman said there can be no assurance that the process will result in a deal.
There has also been interest in Supervalu from other investment firms, including Yucaipa Cos, KKR & Co (KKR.N) and TPG, which were looking at the company's parts, Bloomberg reported earlier this month.
Cerberus was one firm believed to be looking at the company as a whole, two of the sources told Reuters. They said Supervalu's management preferred to sell the company outright rather than break it up.
Jefferies analyst Scott Mushkin said he thinks the best path is to sell non-core assets on the East and West coasts and then spin off Save-A-Lot, which would turn Supervalu into a very strong regional supermarket company.
The financing package under current consideration includes an equity check of $800 million to $900 million, with the rest coming from debt, according to Debtwire.
Supervalu is weighing a buyout deal after losing customers to competing supermarket operators like Wal-Mart Stores Inc (WMT.N) and Kroger Co (KR.N), which has forced Supervalu to aggressively close stores and cut costs.
Supervalu posted a net loss of $111 million, or 52 cents per share, for the second quarter ended on September 8, compared with a year-earlier profit of $60 million, or 28 cents a share.
Excluding charges, the company reported break-even results. Analysts on average had forecast earnings of 13 cents a share, according to Thomson Reuters I/B/E/S.
Sales fell to $8.04 billion from $8.43 billion a year earlier. Analysts were expecting $8.01 billion.
Supervalu shares were up 91 cents, or 42 percent, at $3.09 on the New York Stock Exchange in late afternoon trading. The shares are still trading at less their 52-week high of $8.75, touched in October 2011.