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BOISE, Idaho — Albertsons Cos. has filed plans to go public in a move that some experts say could pave the way for future acquisitions as well as help fund the company’s ongoing efforts to improve store operations, merchandising and customer service.
Albertsons Cos. has filed plans to go public in a move that some experts say could pave the way for future acquisitions as well as help fund the company’s ongoing efforts to improve store operations, merchandising and customer service.
Albertsons, which is headquartered here, is privately owned by an investor group led by New York City-based Cerberus Capital Management. It ranks as the No. 2 traditional supermarket chain in the United States, behind Kroger Co. Albertsons operates more than 2,200 grocery stores in 33 states and the District of Columbia under 18 banners, including Alberstons, Safeway, Vons, Randalls, Shaw’s and Jewel-Osco.
In its filing with the Securities and Exchange Commission, Albertsons said it planned to raise up to $100 million with its initial public offering, which is expected to be one of the larger IPOs to take place this year.
That figure is considered a placeholder, though, and the actual amount raised could be significantly higher or lower than that. The amount raised in the offering will ultimately turn on the level of investor interest in the company, which has improved its same-store sales and cut costs in recent years, but still carries a sizable debt burden.
According to its filing, Albertsons recorded $27.2 billion in sales and a loss of $1.2 billion for the 2014 fiscal year ended February 28. On a pro forma basis, which includes Safeway’s performance and excludes some merger-related costs, sales for the fiscal year would have totaled $57.5 billion and the loss would have been $385 million.
The filing also indicates that Albertsons has about $12 billion in debt. Albertsons said it aims to use the net proceeds from the offering to repay debt and for general corporate purposes.
The IPO will mark a major milestone in the return of Albertsons to the top ranks of American retail companies.
Joe Albertson founded the original Albertsons chain in 1939, and by the time he died in January 1993 at age 86, the company ranked as the nation’s sixth-largest supermarket operator by sales, with 651 stores in 19 states.
The company continued to grow steadily through the 1990s, but a merger with American Stores Co. in 1999 led to problems, and in 2006 Albertsons agreed to be acquired and broken up.
The deal resulted in 1,110 supermarkets going to Supervalu Inc., and more than 700 standalone drug stores going to CVS Corp. Supermarket veteran Bob Miller formed Albertsons LLC for the remaining 661 stores, backed by Cerberus Capital Management.
Over the past nine years, Miller and Cerberus first pared down Albertsons LLC, and then steadily built it back up again.
In 2013 Albertsons announced a deal with Supervalu to acquire five supermarket chains — including Jewel-Osco, Acme, Shaw’s and Star Market. The deal also brought all the remaining Albertsons stores back together under one company.
The deal, which involved 877 stores, called for an investor group led by Cerberus Capital Management to pay Supervalu $100 million in cash for the stores and also assume $3.2 billion in existing debt.
Cerberus also agreed to acquire a stake in Supervalu.
That same year Albertsons, with Cerberus Capital Management, also bought United Supermarkets, a 51-store chain based in Lubbock, Texas.
An even bigger deal came in 2014, when Albertsons and Cerberus agreed to buy Safeway Inc. for $9.2 billion. To win regulatory approval for that deal, the company agreed in December to divest 168 stores.
Albertsons and Safeway announced completion of their merger on January 30. The merged company consists of three regions and 14 retail divisions, supported by corporate offices in Boise; Pleasanton, Calif.; and Phoenix.
