S&P: SuperValu remains on watch

Standard & Poor's said it said its ratings on SuperValu Inc., including its BBB long-term corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Dec. 23.

The agency said SuperValu reached an agreement to acquire Albertson's Inc. (BBB-/Watch negative/A-3) in partnership with two other buyers.

SuperValu would retain the key retail food assets, with a consortium led by Cerberus Capital Management L.P. acquiring the noncore food assets and chain drug retailer CVS Corp. (BBB+/stable/A-2) acquiring the stand-alone drugstore business, the agency said.

Upon completion of the acquisition as currently contemplated, S&P said that SuperValu's corporate credit rating would be lowered to BB- with a stable outlook.

The downgrade of SuperValu's ratings, if the acquisition is completed, reflects the substantial execution challenges of acquiring a company larger than itself, managing a much larger and more complex group of retail operations, maintaining corporate overhead functions for the other two buyers for a period of time and operating with greatly increased financial leverage, S&P added.

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