By Tonya Garcia, MarketWatch
With food-at-home in high demand due to the coronavirus pandemic, Albertsons Cos. has filed paperwork to go public.
Albertsons /zigman2/quotes/209620932/composite ACI -0.35% began trading on the New York Stock Exchange on Friday under the ticker symbol “ACI.” Shares immediately fell before rising and then ending down 3.4%.
Late Thursday, the company priced its IPO at $16 a share, lower than the $18-to-$20 price range it was seeking. The grocer will sell 50 million shares — also below expectations, as it was seeking to sell 65.8 million shares — raising up to $800 million.
Included in the Albertsons nationwide portfolio of grocers are the namesake chain along with Vonns, Safeway, Jewel and Acme, among others.
There are 24 banks underwriting the deal, led by BofA Securities, Goldman Sachs & Co., J.P. Morgan and Citigroup.
Albertsons is controlled by a set of sponsors that includes private-equity fund Cerberus; real-estate investment trusts Kimco Realty Corp. and Klaff Realty L.P.; Lubert-Adler Management, a real-estate fund; and Schottenstein Stores Corp., a developer of shopping centers.
Albertsons opened its first store in Boise, Idaho, in 1939, which is where the company is still headquartered. In 2015, Albertsons merged with Safeway. The company has 2,252 stores across 34 states and stands in first or second place in market share in 68% of the 121 metropolitan areas where it operates. Seven stores in the Albertsons portfolio have been around for more than a century.
In a letter to prospective shareholders, Vivek Sankaran, Albertsons chief executive and a PepsiCo Inc. /zigman2/quotes/208744353/composite PEP +0.14% alum who joined Albertsons in April 2019, says the company’s stores, supply chains and technologies have been integrated since the merger.
In 2017, there was talk that Albertsons was considering a takeover of then publicly traded Whole Foods Market. Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +1.88% has since acquired Whole Foods in a $13.7 billion deal. Albertsons ultimately purchased meal-kit company Plated that year. Financial terms of that acquisition weren’t disclosed.
Albertsons phased out Plated at the end of 2019 in favor of greater focus on its private-label Own Brands, which was a $13.1 billion portfolio of business in fiscal 2019.
And in 2018, there was discussion about a merger between Albertsons and Rite Aid Corp. /zigman2/quotes/201733831/composite RAD -3.68% , a deal valued at $24 billion, which prompted Albertsons to pull its IPO plan. That deal fell through after pressure from stockholders.
Preparations for this latest IPO were first reported in January 2020.
Sales last year rose to $62.5 billion from $60.5 billion in 2018, and the company earned $466 million, or 80 cents a share, in 2019 compared with $131 million, or 23 cents a share, in 2018. The company says it has gained market share during the pandemic, with identical sales soaring 30% for the first 12 weeks of fiscal 2020.
Albertsons has taken a number of safety measures amid the coronavirus pandemic, including providing masks and gloves for its workers and adjusting store hours.
The company agreed to sell $1.75 billion in convertible preferred stock Apollo Global Management Inc. It also sold $1.68 billion of convertible preferred stock to ACI Real Estate Company LLC, a subsidiary of Safeway and an indirect subsidiary, and AL RE Investor Holdings, LLC.
Albertsons has agreed to pay a quarterly dividend, effective fiscal 2020, of 2.5% of the IPO price.