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Cerberus’s Albertsons Files for IPO Showing It’s Profitable

Michael Hytha

(Bloomberg) -- Albertsons Cos., the supermarket chain backed by private equity firm Cerberus Capital Management, filed for an initial public offering, disclosing growing profitability.

The grocer in a filing Friday listed the size of the offering as $100 million, a placeholder that will likely change.

Cerberus had been weighing other options for the Boise, Idaho-based company, a person familiar with the matter said in January.

The IPO would be one the few for a grocery chain on a U.S. exchange. The largest in the U.S. was the June listing by Grocery Outlet Holding Corp. that raised $435 million, including so-called greenshoe shares, according to data compiled by Bloomberg.

Competition is intensifying in the industry as big players including Walmart Inc. and Amazon.com Inc. expand their digital presence. The entry of German discount chains Aldi and Lidl in the U.S. has also contributed to squeezed margins.

Cerberus, the New York-based private equity firm, first invested in Albertsons in 2006 and has grown the grocer through acquisitions, including a $9.2 billion takeover of Safeway Inc. announced in 2014. It has been seeking an exit for years.

In 2015, Albertsons filed for an IPO to raise as much as $1.7 billion. It withdrew plans for the offering in 2018.

Market Share

Albertsons has 2,260 stores, doing business under 20 names, including Safeway and Vons. It ranks as either first or second in market share in two-thirds of the 121 metropolitan areas in which it operates, according to its filing with the U.S. Securities and Exchange Commission.

It earned $131 million on revenue of $61 billion for the fiscal year ended Feb. 23, 2019, compared with net income of $46 million on revenue of $60 billion during the same period the previous year, according to the filing.

In addition to $3.8 billion it expects to spend in its last fiscal year on store remodels and openings, its expenditures on new technology total about $375 million for the year. Albertsons offers curbside pick-up service and also collaborates with Instacart, GrubHub and Uber Eats for delivery.

Controlled Company

Cerberus and other sponsors will continue to control Albertsons after the IPO, the company said.

The offering is being led by Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. The company is seeking to list the shares on the New York Stock Exchange under the symbol ACI.

(Updates with details of filing starting in eighth paragraph)

To contact the reporter on this story: Michael Hytha in San Francisco at mhytha@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Michael Hytha, Joe Schneider

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