Description

The Company is misunderstood by the market as an over-levered retail supermarket chain, when in fact it is on a path to becoming a pure play food distribution company led by a stellar new CEO, Mark Gross.  Mark Gross drove the largest distributor in the sector, C&S Wholesale, from $3 billion to $20 billion in sales over nine years, and we expect him to achieve similar growth at SUPERVALU, both organically and through acquisitions, as demonstrated by the recent purchase of Unified Grocers (“Unified”).  The implications of this transformation are meaningful, as EV/EBITDA valuations for comparable distributors range from 6.3x to 9.9x, significantly higher than supermarket multiples of 4.1x to 6.3x. 

Along with market misperceptions, SVU shares have been severely and unfairly punished over the past year by the generalized negative sentiment around ongoing deflationary concerns impacting the retail grocery landscape, and the disruptive Amazon.com (AMZN) acquisition of Whole Foods Market (WFM).  We believe appropriately valuing SVU today (before any asset monetization opportunities) through a sum-of-the-parts analysis, implies a valuation of $44.59 to $55.23 per share, or 83% to 126% higher than the current stock price.

Moreover, SVU has a much better balance sheet than the market appreciates.  The Company’s recent sale of its Save-A-Lot division for $1.4 billion enabled a sharp reduction in its leverage ratio from 3.2x to 2.0x, and future efforts to sell the remaining retail segment should help to further strengthen SVU’s financial profile.  Lastly, we have conducted an in-depth analysis of SVU’s real estate assets, uncovering material “hidden” value between $809 million and $1.1 billion, which is above the entire market capitalization of the Company.  Accounting for all the potential monetization efforts and further value extraction from the growing distribution business suggests a longer-term price target of $57.33 to $76.51, or 135% to 213% upside to the current stock price.

Business Overview

SUPERVALU offers wholesale grocery distribution and logistics services to 1,902 independent retailers and has 217 regional grocery stores under the Cub Foods, Shoppers Food & Pharmacy, Shop ‘n Save, Farm Fresh, and Hornbacher’s banners. 

Wholesale Segment

SVU’s wholesale segment represents 71% of overall net sales, with 3.2% EBITDA margins, which have been relatively stable over the past five years.  The Company’s wholesale operations focus on two primary geographic regions, East and West, and span 40 states.  Serving as the primary wholesale distributor to 1,902 stores, and as the secondary distributor to an additional 244 grocery locations, SVU offers its wide-ranging customers an assortment of both food and non-food items, including the Company’s own private-label products.  Utilizing its 18 distribution centers, SVU’s deep infrastructure employs leading technologies to maximize supply-chain efficiencies and minimize overhang.  Encouragingly, approximately 68% of SVU’s top 25 customers have been wholesale customers for over 20 years.

Retail Segment

Retail continues to diminish in relative size for SVU, representing 28% of net sales, with 2.9% EBITDA margins.  Over the last five years, EBITDA margins have been in a wider range between 3.5% and 6.0%, with 2018 expected to represent a new low.  The Company owns and operates 217 retail locations under five distinct retail banners: Cub Foods, Shoppers Food & Pharmacy, Shop n’ Save, Farm Fresh, and Hornbacher’s.  Total retail EBITDA was $162 million last year driven by flat gross margins, while SG&A deleveraged 164bps due to a 5.4% retail same store sales decrease. 

Market Misperceptions

While we recognize the current competitive retail environment, and the impact that Amazon’s acquisition of Whole Foods can have upon the grocery sector, we believe the market has indiscriminately punished SVU shares.  Notably, the market has completely overlooked the fact that 74% of the Company’s fiscal year (“FY”) 2018 EBITDA will come from its wholesale distribution business, which is stable and largely immune to the above concerns.

SVU is admittedly coming off a difficult FY 2017, as evidenced by the Company falling short of sales and EPS expectations in two out of four quarters, and its stock falling 31% for the year.  These fundamental disappointments however were driven primarily by weaker sales and deflationary pressures relating specifically to the retail business.  In April 2016, Wal-Mart Stores (WMT) started discounting pricing aggressively to gain market share, which affected the entire grocery industry.  At the same time, Albertsons was expecting to launch an initial public offering, leading it to also invest heavily in price to drive same store sales.  Moreover, this year, Lidl opened its first 20 stores in the US in June, prompting WMT to become increasingly focused on private label and drive prices down further.  Investors believe that the emergence of new lower price point grocery options will adversely affect the traditional grocery model by narrowing the price gap and compressing gross margins further.  In advance of this longer-term negative headwind, grocery valuations, on average, have contracted from 7.5x to 5.4x EV/EBITDA.  Moreover, The Kroger Company’s (KR) recent Q1 2017 earnings miss further reinforced that privately held Aldi and Lidl’s entrance into the US, and WMT’s subsequent response, represent material margin headwinds for the industry with few clear offsets.  Lastly, higher inflation hopes for the current year have now been largely dismissed as key industry players suppress prices on core everyday product, partially offsetting what would have constituted a positive macro driver for the industry.

Although Amazon poses a threat to the retail industry longer-term, we believe the 22% pullback in SVU shares the day AMZN announced its acquisition of WFM was unwarranted given the majority of SUPERVALU’s business is distribution, not retail.  Notably, we do not expect AMZN to become a grocery wholesale competitor in the near- or long-term.  Also, SVU’s wholesale customers skew towards rural markets, while WFM and Amazon Fresh’s core customers skew heavily urban.  In fact, we believe the AMZN-WFM acquisition could serve as a potential tailwind for SVU winning new wholesale business as small independent grocers, over time, better realize how SVU’s back office services can help them adapt to a rapidly changing industry backdrop increasingly focused on scope and scale.  Lastly, if AMZN decides to build more WFM stores, we believe this supports the narrative expressing the key role brick and mortar plays in grocery longer-term.     

The impact from the concerns above, combined with the market’s stale perception of SVU as an over-levered retail company, has caused SVU’s EV/EBITDA multiple to hit a new low of 4.1x, marking a drastic deviation from its average historical trading multiple range of 5.0x to 7.0x and 2014 peak of 7.0x.  Over the next several quarters, as the wholesale operations inflect positively, and SVU embarks upon its divestiture of its retail operations and continued debt pay-down, we believe that this severely depressed multiple will expand materially.

New CEO Mark Gross: The Ideal Leader to Execute SVU’s Transformation

In the midst of this difficult market backdrop and misperceptions, SVU hired a new CEO, Mark Gross in February 2016.  Prior to joining SVU, Mark Gross served as Co-President of C&S Wholesale Grocers, the largest wholesale distributor in the US.  While at C&S, he successfully grew the business from $3 billion in sales in 1997 to $20 billion in 2006, both organically and through five acquisitions.  Moreover, while serving as CFO, he helped boost margins through tight expense control.  Since joining SVU, Mark Gross’ focus has been on transforming the Company into a pure play wholesale distributor. 

Beyond his managerial and operational expertise, Mark Gross also founded Surry Investment Advisors, an independent advisory firm that advised clients on multibillion-dollar M&A transactions within the grocery space.  He spent ten years there before joining SUPERVALU.  Given SVU’s recent acquisition of Unified Grocers, we see Mark Gross’ new role as an opportunity for SVU to extract synergies from future acquisitions and pursue an accretive M&A strategy.  Overall, we believe that as a proven operator with over 20 years of grocery and financial advisory expertise, Gross brings unique industry knowledge to SVU, and will serve as a critical catalyst in driving SVU’s wholesale distribution transformation.

Wholesale Distribution Business Potential

After negative growth during the past two years, we expect SVU’s wholesale business to reaccelerate to low double-digit organic growth this year, alongside additional growth through the highly accretive Unified Grocers acquisition.  Under the leadership of Mark Gross, we expect material compounded top line growth beginning this fiscal year, similar to the pattern exhibited at C&S Wholesale Grocers.  We estimate wholesale revenue and EBITDA of $11.1 billion and $354 million, respectively, and anticipate longer-term wholesale revenue to grow $1.0 billion annually driven by continued organic growth wins and acquisitions.  This strong top-line growth should deliver between $425 million to $450 million in EBITDA over the next two to three years, resulting in material upside along with multiple expansion.

Organic Growth

SVU has a strong pipeline of new customer wins for FY 2018 that should represent a $1.0 billion sales opportunity, or 13% growth, substantially greater than market expectations.  More specifically, we believe The Fresh Market partnership, announced last August, will roll-out to 176 stores and add roughly $667 million of sales in FY 2018.  The America’s Food Basket partnership will also roll-out to 47 stores.  It began in Q4 2017 and should materialize as another $194 million opportunity for SVU.  Additionally, Coborn’s Private Label and Gordy’s Produce are smaller, yet material wins, representing approximately $30 million and $19 million in sales, respectively. 

Furthermore, we estimate the Marsh Grocery opportunity of 15 stores, along with 40 stores from Central Grocers, to be approximately $120 million this year, assuming a similar sales per square foot for Marsh and Central and an industry average 27% gross margin.  Although the Marsh win originally encompassed 42 stores prior to its May 11^th bankruptcy announcement, the Central Grocers addition largely offsets this temporary setback.  Moreover, the Marsh business was all incremental to an already highly efficient warehouse in Champaign, Illinois.  We believe the Street has underestimated these opportunities, estimating closer to $700 million of potential sales growth compared to our $1.0 billion assumption.

Unified Grocers: A Transformative Acquisition

Complementing SVU’s strong organic growth, acquisitions also will serve as significant growth drivers for SVU going forward.  On June 23^rd 2017, SVU completed the acquisition of Unified Grocers for $375 million.  The market however, has characterized the Unified Grocers acquisition as an unprofitable deal, due to its seemingly lower-margin profile.  We believe that investors are being quite shortsighted in this regard, and are not factoring in the true potential value of the Unified story.  Based on our analysis, we believe that when accounting for Unified’s real estate value and achievable cost synergies, SVU actually only paid 2.2x EV/EBITDA, a material discount to the 4.3x stated deal multiple.  Moreover, we are confident there is upside to the Company’s synergy target, and that material reverse synergies from Unified’s Market Centre offerings of specialized products will drive additional shareholder value.

Unified Grocers serves as a wholesale distributor to various operators throughout the Western US and Pacific Rim regions.  In 2016, Unified achieved $3.8 billion in wholesale revenue and operating income of $9 million.  This implies a modest EBIT and EBITDA margin of 0.2% and 0.9%, respectively, as compared to SVU’s of 2.4% and 3.7%, respectively.  While the market is skeptical given Unified’s low margins, SVU has outlined $60 million of synergies to boost future profitability.  Moreover, we believe Unified has an opportunity to improve margins under SVU’s leadership, both in terms of its operational efficiency, and supply chain initiatives.

Unified Grocers’ Synergy Upside

SVU has identified $60 million in cost synergies from the Unified acquisition over the next three years.  This figure does not include potential reverse synergies from Unified’s Market Centre.  We expect the Company to present more details on each aspect of the cost synergy buckets in the near future, as the Company has not spoken publicly since the deal closed.  We believe this initial synergy target will prove to be extremely conservative. In fact, we believe SVU was dis-incentivized from releasing aggressive synergy numbers before the deal closed, as the Company needed Unified’s co-op members to vote to approve the deal.  We estimate at least $33 million of the $60 million three-year synergy target will be completed in the first 18 months, and point to the following buckets to drive cost synergies: 1) eliminating duplicative management and overhead costs; 2) logistics and procurement synergies; and 3) real estate consolidation.

Duplicative Management

We expect an immediate impact from the elimination of duplicative management and overhead costs.  SVU and Unified have no need for two executives to fill identical roles, and we expect Mark Gross to select the best candidates at no interruption to the Company’s day-to-day business.  The annual executive compensation run-rate for Unified was $10 million, which we believe is duplicative and will go away immediately.  We think there could be additional upside to this $10 million driven primarily by duplicative overhead costs, resulting in a $15 million total synergy opportunity.

Logistics and Procurement

We believe there is material upside from logistics and procurement synergies, which may take longer than management and overhead costs to realize, but offer more strategic longer-term upside Furthermore, given its stronger balance sheet, SVU should be able to drive increased productivity across Unified’s inefficient warehouses with marginal capex spend, which was previously unattainable due to Unified’s financial condition.

We also conducted a productivity gap analysis on an EBIT per square foot basis in order to support the material EBIT opportunity from the acquisition.  Unified’s current average sales per square foot is 1.6x SVU’s, while Unified’s EBIT per square foot is 25% of SVU’s.  As Unified’s EBIT productivity moves closer to SVU’s, we estimate the additional Unified EBIT opportunity to be $77 million.  This gives us a high degree of confidence that not only should the $60 million synergy target be exceeded and accomplished in a shorter window than three years, but also that the EBIT productivity gap will drive sustainable long-term SVU wholesale EBIT improvement.

Additionally, Mark Gross worked with Unified while at Surry Investment Advisors, and therefore had a strong knowledge of key personnel strengths and weaknesses at Unified prior to the acquisition.  This should enable the integration to move in a more seamless manner.  For example, SVU has given full control of the meat procurement process across the country to the Unified team, rather than to SVU’s.  Consequently, by utilizing Unified’s broader scope on beef commodities, SVU will leverage Unified’s core strength in beef purchasing from the West Coast across SVU’s total client base to drive additional procurement synergies. 

Real Estate Consolidation

The third piece of the $60 million targeted cost synergy goal is consolidation of SVU’s Pacific Northwest distribution centers (“DCs”).  Unified leases a full distribution center in Seattle and owns a DC in Portland, while SVU owns a similar waterfront facility in Tacoma.  Given that these three locations are within 150 miles of one another, we believe SVU will eventually sell the Tacoma and Portland DCs, and let the lease expire for the Seattle DC, shifting distribution to other Company-owned facilities.  This should generate approximately $90 million in proceeds, and result in a $9 million EBIT benefit.  

First, we value the Tacoma DC at $30 million based on 751,000 square feet with three comparables ranging from $48 to $60 per square foot over the last six years.  We conservatively utilize the low-end of the comparable range as Tacoma has 17-foot ceilings, compared to the 30-foot norm.  However, the property can also be used for residential purposes given its pristine waterfront location.  Proceeds from the sale of the Tacoma DC could be used to pay down the Company’s recently financed term loan, thereby offsetting other limitations around SVU’s use of future proceeds.

Furthermore, we conservatively value the Portland DC at $60 million, with one million square feet, and seven comparables ranging from $38 to $87 per square foot over the last two years.  Generating after-tax proceeds of $49 million, SVU could allocate this capital from consolidation to repurchasing shares, which would be 5% accretive to EPS, assuming the board of directors approves a share repurchase authorization.

Lastly, we believe the lease on the Seattle distribution center, which expires in April 2018, will be a $9 million EBIT benefit.  However, we do acknowledge that this lease expiration benefit could be offset to some degree by the lease expense associated with a new DC, should SVU not utilize an existing facility.

Reverse Synergies

In addition to cost synergies, we believe there are material reverse synergies that SUPERVALU will receive from Unified, driven by Unified’s unique Market Centre offerings.  Unified’s Market Centre is an independent segment dedicated to providing ethnic and organic product.  This offering should be able to serve SVU’s extensive customer network across all geographic markets and promote higher sales.  By selling focused products that remain distinctly differentiated from SVU’s traditional offerings, Market Centre occupies a niche that can be accelerated through Unified’s new partnership with SVU.  We think a successful integration of Unified in tandem with SVU’s ability to exceed current synergy estimates provides a strong platform for further accretive transactions going forward.

Lastly, Mark Gross has hired his previous integration team from C&S, who successfully integrated at least five acquisitions, and applied those identical best practices to the Unified deal.  In addition, Mark Gross brings the SUPERVALU team’s insights learned from the Save-A-Lot acquisition and subsequent divestiture, and will apply those analytics to this integration as well.  As both teams bring tremendous expertise, material synergy upside should be realized from both back office and DC consolidation, along with reverse synergies, resulting in upside to current synergy targets over time.

Save-A-Lot Sale Dramatically Alleviates SVU’s Balance Sheet Misperception

We believe that investors continue to perceive SVU as the highly levered grocer it once was, despite the Company’s material debt reduction.  Demonstrating SVU’s commitment to transform itself into a pure play wholesale distributor, the Company announced that it was exploring a transformative divestiture of its discounted retail banner, Save-A-Lot in July 2015.  As one of the largest discounted grocery retailers in the US, Save-A-Lot operated 1,360 stores across a corporate footprint predominantly centered in the Southern and Eastern geographic regions of the US.  On December 5^th 2016, SVU completed the sale of Save-A-Lot to SAL Acquisition, an affiliate of Onex (ONEX), for $1.7 billion in cash, or 6.2x adjusted EBITDA.  Through the sale of Save-A-Lot, the Company has emerged as a dominant wholesaler unburdened by excessive leverage, having paid down $1.1 billion of net-debt and reduced leverage from 3.2x to 2.0x.

Potential Shareholder Friendly Initiatives

While we are confident in the SVU story due to Mark Gross’ transformation of the business into a pure play wholesale growth story, there are three extremely significant strategic opportunities that will unlock the material value embedded within SUPERVALU: 1) monetizing the retail supermarket segment; 2) selling and leasing back the Company’s 28 owned distribution centers for greater than the market capitalization of the Company and using the proceeds to repurchase stock and pay down debt; and 3) over time, selling the whole Company or executing a transformational merger of equals.

Retail Segment: A Drag on SVU’s Multiple

Despite the divestiture of over 90% of SVU’s retail locations since 2007, concerns surrounding retail exposure and leverage are still plaguing the stock, and we believe are key factors behind SVU’s current three-year trough valuation of 4.1x EV/EBITDA.  However, given the strong upside potential for the wholesale segment, and based on comparable food distribution trading multiples of 6.3x–9.9x EV/EBITDA, we believe further divestitures of the remaining retail assets will result in SVU’s revaluation toward this improved EV/EBITDA range.  Furthermore, beyond the upside generated by material multiple expansion, a sale of SVU’s retail segment would enable the Company to pursue substantial share repurchases or debt pay-down with the proceeds, driving further EPS accretion and shareholder value.  Notably, in recent months, there has been market speculation regarding SVU working with bankers from Food Partners to divest its mid-Atlantic block of supermarket stores. 

We estimate a sale of the retail division would be 18% to 74% accretive to earnings, depending upon whether SVU allocated the total proceeds entirely to share repurchases or to debt pay-down.  Retail represents an estimated $4.2 billion in sales and $125 million of EBITDA in FY 2019, and has material real estate value.  To be conservative, we do not give SVU credit for retail real estate, which we believe has a book value of $200 million and a far greater market value.  We apply a retail sale multiple of 4.0x EBITDA, generating $498 million in proceeds.  Assuming a $4.00 share price, SVU could purchase 125 million shares with the proceeds, resulting in 74% earnings per share accretion.  Alternatively, if SVU chose to pay down debt with the proceeds, the result would still be highly accretive, resulting in 18% EPS accretion. We expect the Company to ultimately choose a blend of these two options. 

The key hurdle for SVU in selling retail grocers will be to find the right strategic acquirer who does not already support a full back-office and distribution network.  Doing so would allow SVU to remain the primary wholesaler to the newly-divested retail locations on a go-forward basis.  We also think a private equity acquirer is another viable option, given that Cerberus acquired five retail banners from SVU in 2013 for $3.3 billion.  In either event, SVU’s retail segment divestiture, subsequent share repurchase authorization and debt pay-down, and eventual multiple expansion should generate significant shareholder value.

Distribution Centers: Untapped Real Estate Value

SVU owns 28 distribution centers which we believe can be monetized through sale-leaseback transactions, generating significant shareholder value.  Post-Unified, SVU has 28 total DCs: 18 SVU DCs representing 13.3 million square feet and 10 Unified DCs representing 3.0 million square feet.  In conducting our real estate valuation, we assess the value of each distribution facility individually, incorporating between two and ten recent comparable sales within close proximity to the DC in question to derive an estimated price and associated rent expense, assuming a 7-8% cap rate.  We conservatively estimate the total 16.3 million square feet can generate approximately $950 million, or more than the current market capitalization of the Company.  We believe the SVU-owned distribution centers are worth approximately $700 million, and Unified’s owned DC value approaches $250 million.

We believe SVU already has plans to sell the Unified DC in Portland, generating $49 million in after-tax proceeds, which can be used to repurchase 12 million shares, representing 5% EPS accretion.  However, were SVU to conduct a sale-leaseback on every owned distribution center, the Company would generate after-tax proceeds of $695 million.  As per the covenants surrounding the Company’s recent term loan, the first $100 million of these proceeds would be allocated to mandatory debt prepayments.  Additionally, SVU would have to pay down an additional $85 million, in order for its Secured Leverage Ratio to reach 2.0x.  Nonetheless, even after the $185 million mandatory prepayments, SVU would still retain $510 million in after-tax proceeds if all the real estate were monetized, which could be used for a significant stock buyback.  Assuming a purchase price of $4.00 per share, SVU could purchase 128 million shares, representing 49% EPS accretion.  This material opportunity serves as one of the Company’s most promising options in its attempt to drive shareholder value, and we look forward to details from the Company on this opportunity.

Potential Sale of the Company as Long-Term Exit Strategy

Although our thesis is not contingent on a Company sale, we believe SVU offers tremendous long-term optionality as a pure play wholesale distributor.  We believe there are two primary potential strategic acquirers of SVU, in addition to interest from private equity firms.  SpartanNash Company (SPTN) could pursue an acquisition of SVU or a merger of equals, or C&S could acquire SVU through a Reverse Morris Trust transaction.

SpartanNash is a full service value-added distributor to 2,000 independent grocery stores across 47 states.  SPTN has a market capitalization of $983 million and an enterprise value of $1.7 billion, compared to SVU’s market capitalization of $873 million and enterprise value of $2.0 billion.  Both SPTN and SVU distribute to independent grocers and the military, and also have fully operating retail stores.  SPTN has 17 distribution centers and SVU has 18, and our analysis suggests that only one of SPTN’s facilities is too far from SVU’s to promote DC consolidation.  We think DC consolidation, logistics and procurement cost synergies, and removal of management and overhead costs would allow for material synergies.  Assuming SVU successfully integrates Unified and achieves upside to its synergy target, we believe it is more likely for a SpartanNash deal to occur, with Mark Gross emerging as the leader of the “Newco.”

Additionally, we believe a Reverse Morris Trust merger with C&S would also drive shareholder value.  C&S Wholesale Grocers is the largest wholesale grocery distributor in the US.  C&S operates regional distribution centers and services 6,500 grocers in 50 geographic markets across 15 states.  A Reverse Morris Trust transaction is a tax-optimization strategy in which a smaller company buys a larger company in a tax-efficient manner.  A company spins-off one of its businesses, and subsequently sells its assets to an interested party while avoiding taxes on gains from the asset disposal.  In this case, SVU would spin-off its wholesale segment, which would then be merged with C&S to create a new company that would issue shares to SVU shareholders, and SVU shareholders would be required to hold over 50% of the voting rights.  Although complex, we believe this option is feasible given that Mark Gross spent ten years at C&S and knows both the company and the industry extremely well.  Further, we think one large distributor with over $45 billion in revenue would offer tremendous synergies via its dominant scale and logistics capabilities.

Bob Evans Farms (BOBE) Case Study: A Pure Play Packaged Food Precedent

In analyzing precedent transactions where division sales resulted in a pure play higher multiple “Newco,” we believe the recent Bob Evans Farms (BOBE) transaction demonstrates the degree to which transformative corporate divestitures can reshape valuation multiples.  BOBE’s successful transformation from a restaurant/packaged food company to a pure play packaged food company underscores the potential impact for SVU.  We believe that just as BOBE’s valuation increased once it shed its lagging restaurant segment, so too should SVU’s valuation as it emerges as a pure play wholesale distributor in the future.

From 2015-2017, BOBE’s restaurant segment EBITDA declined from $150 million to $47 million, while simultaneously its packaged food segment EBITDA increased from $51 million to $86 million.  Given the clear disparity in the direction of its businesses, BOBE began to actively seek to divest its restaurant segment.  On January 24^th 2017, Golden Gate Capital announced that it would acquire BOBE’s restaurant segment for $565 million, or 8.0x EV/EBITDA.  BOBE used the proceeds from the sale in addition to new debt financing to purchase Pineland Farms Potato Company for $295 million, pay down $362 million of debt, and issue a one-time $150 million special dividend ($7.50 per share).  Post debt pay-down, BOBE’s leverage decreased from 3.0x to 1.5x.  Since then, BOBE’s continued organic growth has been rewarded by investors as the stock has appreciated by 41%.

We think BOBE’s story foreshadows the opportunity for SVU.  Indeed, BOBE’s stock price increased 21% the day after its announcement of the deal, and continued to climb thereafter.  This rally was primarily driven by the market’s revaluing of BOBE’s EV/EBITDA multiple to better align with its packaged food peers, which in 2018 had an average EV/EBITDA of 11.3x versus the casual dining peers’ average of 8.5x.  With BOBE currently trading at ~$67.51 per share, representing a 41% premium to its closing price prior to the sale, we are encouraged by the upside potential for SVU in the likely event that it continues to divest the remaining piece of its retail segment.

Catalyst

Real estate monetization and WS ebitda growth