Cerberus Capital Management‘s next shopping spree may end with a bid for Supervalu, the embattled supermarket operator.
The leveraged buyout firm has been lining up at least $4 billion in financing to support a potential bid, a person briefed on the matter told DealBook on Monday. This person cautioned that work on the possible offer was continuing and may not lead to a formalized bid.
Shares in Supervalu jumped nearly 45 percent after Debtwire, an trade publication, reported on Cerberus's fundraising efforts. That values the supermarket company at about $677 million.
Supervalu has struggled under enormous obligations, which included $6 billion in long-term debt as of Sept. 8. It reported a $111 million second-quarter loss last week. The company said then that its sales process was moving along and that it was in “active dialogue†with a number of potential buyers.
Private equity firms are no strangers to the supermarket business, drawn by the real estate underneath the network of stores. Cerberus and Supervalu, along with CVS, partnered to buy the Albertson's chain in 2006 for $17.4 billion.
And Cerberus came of age by making investments in distressed companies like Chrysler.
