Supervalu Inc. has agreed to sell Save-A-Lot, the Earth City-based discount grocery chain, to Canadian private equity firm Onex Corp. for $1.37 billion in cash.
The deal comes more than a year after Minneapolis-based Supervalu went public with plans to spin off the discount grocery chain.
As part of the deal, Supervalu will provide services such as payroll and merchandising technology to Save-A-Lot for five years, Supervalu said in a statement Monday. The company expects to complete the deal by Jan. 31.
Supervalu plans to use the proceeds to prepay at least $750 million against its term loan balance, to further reduce debt and improve its capital structure, as well as to fund growth initiatives, it said.