* Selling Albertsons, Acme, Jewel-Osco, Shaw's, Star Market
* Cerberus leads investor group in deal
* $3.3 bln deal includes assumption of $3.2 bln in debt
* Group to take up to 30 percent of remaining Supervalu
* Supervalu shares soar on announcement
By Olivia Oran and Lisa Baertlein
Jan 10 (Reuters) - Supervalu Inc struck a $3.3 billion deal to reduce its burdensome debt by selling five of its supermarket chains to an investor group led by Cerberus Capital Management LP, the No. 3 U.S. grocery store operator said on Thursday.
Supervalu has been losing customers to rivals like Kroger Co and Wal-Mart Stores Inc. News of the pending asset sale sent its shares up more than 14 percent on the New York Stock Exchange.
Supervalu said the sale includes 877 stores from the Albertsons, Acme, Jewel-Osco, Shaw's and Star Market chains as well as in-store pharmacies under the Osco and Sav-on names.
The deal is seen as a real estate play for the buyer, which will spend $100 million in cash and take on $3.2 billion of Supervalu's debt.
The sale is expected to close by the end of March. When that happens, Supervalu's business will include a food wholesaler serving 1,950 U.S. stores; the 1,300-store discount grocery chain Save-A-Lot; and the regional grocery chains Cub, Farm Fresh, Shoppers, Shop 'n Save and Hornbacher's.
As part of the deal, the Cerberus-led group will launch a tender offer for up to 30 percent of Supervalu's common stock at $4 per share, which represents a 50 percent premium to the 30-day average closing share price.
Supervalu's grocery distribution business will represent about 47 percent of the company's revenue after the sale. Save-A-Lot will contribute one-quarter of revenue and the remaining grocery chains will kick in 28 percent. Executives declined to give additional financial information.
Those businesses should generate annual revenue in excess of $17 billion. In the fiscal year ended in February 2012, the company's total revenue was $36.1 billion.
Goldman Sachs Group Inc and Greenhill & Co Inc advised Supervalu on the transaction. Lazard and Barclays PLC advised Cerberus.
Supervalu, Cerberus and CVS Caremark Corp bought Albertsons Inc in a 2006 deal valued at more than $17 billion. Supervalu's slice topped $12 billion, roughly half of which was from the assumption of debt.
Supervalu's portion of the purchase included more than 1,100 stores - virtually all of which were part of chains it is now selling.
Cerberus bought 655 stores for around $1 billion.
The deal saddled Supervalu with heavy debt that crippled the company when the U.S. recession hit about a year later.
"It's back to square one," Cantor Fitzgerald analyst Ajay Jain said of Supervalu, which had $6.18 billion in long-term debt and capital lease obligations at the end of its latest quarter.
Turning around Supervalu's supermarket operations will be tough sledding, said analysts. That's because non-union retailers such as Walmart, Target Corp, Costco Wholesale Corp and Family Dollar Stores Inc are offering food at rock-bottom prices to lure shoppers. Traditional grocers like Supervalu and Kroger use union labor and, as a result, have higher costs.
"An operational turnaround is extremely difficult, no matter who is running those (store) banners," Morningstar analyst Michael Keara said.
As a result, many on Wall Street view the latest deal as a property play. Cerebrus' partners in the Supervalu purchase include real estate firms Kimco Realty Corp, Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group, which also were key players in the 2006 Alberstons deal.
The group is likely to sell and close stores, as it did the last time around, supermarket consultant David Livingston said.
"They are not in this because they have a passion for running grocery stores. You don't buy failing grocery stores because you want to be in the grocery business," he said.
Supervalu had originally hoped to sell the entire company, but financing issues prevented that, experts told Reuters.
Supervalu's shares leaped 14.1 percent to $3.47 on Thursday.