Wednesday, May 6, 2009

New CEO at Supervalu

Supervalu -- at $44B FY08 revenues Minnesota's 3rd largest company and the 51st largest in the country -- announced today that 62 year old Jeffrey Noddle will step down as CEO.

Craig Herkert, WMT's "president and CEO of the Americas" will take over. He is 49. Prior to WMT, Herkert was with Albertson's -- the company that SVU purchased 3 years ago in a massive acquisition whose synergies have largely never been realized. SVU stock was down on the news.

From the Strib: "Noddle was named CEO in 2001 and chairman of the board in 2002. He steered the company through its largest acquisition in 2006: the $17.4 billion purchase of Albertson's Inc. Supervalu paid $3.8 billion in cash and $2.5 billion in stock and took on $6.1 billion in Albertson's debt. Its partners in the deal included Rhode Island's CVS Corp., New York-based Cerberus Capital Management, Kimco Realty and Schottenstein Stores Corp. of Columbus, Ohio."

By coincidence, I have been modeling and studying SVU this semester. I value its stock at $37.29. This number is based on a 50/50 weighting of discounted cash flow and EV/EBITDA, using comp companies of Kroger, Safeway, and Wal-Mart. The DCF assumes zero revenue growth through 2013. (Sorry for the small screen shots -- I'll try to adjust)

1) Financial Ratio Analysis


2) DCF Analysis (note no revenue growth through 2013)

3) EV/EBITDA Analysis












2009 SVU KR SWY WMT Industry Average










Equity Value






52 wk high 35.61 30.32 32.65 63.17


52 wk low 9.02 19.46 17.23 46.42


Shares O/S (m) 211.75 652.34 427.05 3910



4,725 16,237 10,651 214,248










(add) LT Debt Value 7,968 7,505 4,701 34,549


(subrtract) Cash Value 240 263 383 7,275


Enterprise Value 12,453 23,479 14,969 241,522


EBITDA -1,100 3,893 2,994 29,537










EV/EBITDA NM 6.0 5.0 8.2 6.4












SVU Valuation based on Industry EV/EBITDA:














1) Normalize EBITDA as % of sales:







EBIT DA EBITDA Sales % Weighting


2008 1,648 1,017 2,665 44,048 6.1% 60% 3.6%


2007 1,305 879 2,184 37,406 5.8% 30% 1.8%


2006 435 311 746 19,864 3.8% 10% 0.4%









5.8%

2) Estimate FY 2010 Sales:







43,239,600

















3) Multiply #1 and #2 to obtain estimated FY 2010 EBITDA:




2,489,423

















4) Apply multiple to obtain estimated FY 2010 Enterprise Value:




15,938,531

















5) Add back estimated cash and subtract estimated debt to obtain Estimated 2010 Market Capitalization


8,376,531







6) Divide by shares outstanding (diluted)






$38.96


















1 comment:

  1. Is the mpls deal maker on vacation? No posts since May 6th! Guess there is no news...

    ReplyDelete