Fitch: Supervalu Ratings Likely Unaffected Following Merger.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. does not anticipate any rating implications from Supervalu Inc.'s (Supervalu) announcement that it has signed an agreement to merge with Total Logistics, Inc. in a transaction valued at $233 million in cash and assumed debt. Fitch fitch: see polecat. rates Supervalu's senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'BBB'. The Rating Outlook is Stable. As currently structured, Supervalu will pay $28.50 for each share of Total Logistics, Inc. stock and assume about $68 million of debt The transaction is subject to regulatory approvals and is expected to close in 45 days. Supervalu will fund the transaction via cash on its balance sheet (which stood at $528.6 million at the end of the third quarter ending Sept. 11, 2004). During the first nine months of 2004, Total Logistics, Inc. generated $253 million in revenue and $15.6 million in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . The acquisition is part of Supervalu's strategy of developing competencies in its third party logistics business. The acquisition of Total Logistics, Inc. represents an investment in the warehouse management, transportation, procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. , and logistics engineering businesses. Longer term, this investment highlights the need to lower procurement and transportation costs associated with both food wholesale and food manufacturing. Given the mature nature of both the retail food and packaged goods Noun 1. packaged goods - groceries that are packaged for sale foodstuff, grocery - (usually plural) consumer goods sold by a grocer plural, plural form - the form of a word that is used to denote more than one industries and continued margin pressure as a result of intense competition, opportunities to consolidate and improve 'back office' functions will, in Fitch's opinion, be important drivers to improving margins. |
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