(Reuters) - Supervalu Inc’s SVU.N board approved a spinoff of its Save-A-Lot discount supermarket chain, paving the way for separating a thriving unit from its slower-growing grocery wholesale and food retail businesses.
The separation will be through a pro-rata distribution of shares of Save-A-Lot common stock to Supervalu stockholders, who will own at least 80.1 percent of the outstanding shares of the new company.
Supervalu said Save-A-Lot will trade on the New York Stock Exchange, but did not disclose details on the company’s ticker symbol or when the transaction will close.
The distribution of Save-A-Lot common stock is intended to be tax-free and does not require shareholder approval, the company said in a filing on Thursday.
As an alternative to a spinoff, Supervalu was preparing to explore a sale of Save-A-Lot and had received interest from several private equity firms, Reuters reported in November citing people familiar with the matter.
A traditional grocer, Supervalu is losing market share to big-box retailers such as Wal-Mart Stores Inc (WMT.N) who are increasing their focus on selling groceries.
Supervalu’s shares were down 6.8 percent at $6.24 in an overall weak market.
Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila