Albertsons, the US grocery chain that is among the country’s biggest private companies, is seeking to take advantage of a rebound in the stock markets with an initial public offering that its backers hope could value its equity at as much as $9.6bn.
The retailer said on Thursday it was pressing ahead with a New York listing that could net as much as $1.51bn for existing shareholders led by Cerberus, the private equity group.
Albertsons, which operates more than 2,200 supermarkets including the Safeway chain and produced net sales of $62.5bn last year, has tried before to launch on the public markets. It shelved IPO plans five years ago due to market jitters.
The group, which filed paperwork for a float earlier this year before the sharp market sell-off, does not plan to raise cash itself. Instead, common stockholders intend to reduce their stakes — giving Cerberus the chance to reduce its holding after its 14-year involvement with the company.
In going public now, Albertsons is seeking to capitalise on strength in the stock prices of listed grocers and also to follow recent IPOs in other sectors that have been well-received by investors.
Royalty Pharma, a group that makes money from royalties on drugs, this week raised $2.2bn in the biggest listing of the year. Warner Music earlier this month sold $1.9bn of stock.
Grocers have been clear corporate winners in the pandemic. Unlike discretionary retailers, authorities allowed them to stay open and customers flocked to them in the rush to stockpile.
Kroger, another of the country’s largest grocers, said earlier on Thursday that it generated $41.5bn of sales in the three months to May 23, a year-over-year rise of 19 per cent on a like-for-like basis, excluding fuel.
Albertsons said that as many as 75.7m shares would be offered at between $18 and $20 apiece. The top of the range would give the company a valuation of $9.6bn based on the number of shares outstanding following the listing. With the inclusion of convertible preferred stock this could be as high as $11.6bn.
Last month Apollo, the private equity giant, invested $1.75bn in convertible preferred stock, allowing Albertson’s backers, including Cerberus, to reduce their holdings ahead of the listing.
Founded in 1939 by Joe Albertson in Boise, Idaho, the company today employs 270,000 people and is run by Vivek Sankaran, chief executive.
Albertsons operates under 20 brands including Vons, Pavilions, Randalls and the eponymous chain. It bought Safeway for about $9bn in 2014. The group carries net debt of $6.7bn.
Cerberus first invested in the company in 2006, and along with the property groups Kimco Realty, Klaff Realty, Lubert-Adler Management and Schottenstein Stores bought it from Supervalu in 2013.
Cerberus is planning to sell the biggest chunk of shares, reducing its stake from 37 per cent to about 31 per cent stake. Following the offer, Kimco would be left with about 8 per cent and the three other sponsors 11.7 per cent each.
Albertsons plans to list under the ticker symbol ACI. BofA Securities, Goldman Sachs, JPMorgan and Citigroup are acting as lead joint book-running managers.