American grocery retail chain Albertsons eyes US$1.3bn IPO

USAAlbertsons Companies, one of the largest food and grocery retailers in the United States, has announced the commencement of an initial public offering seeking to raise upto US$1.3 billion through the sale of 65.8 million shares of its common stock held by certain of its stockholders.

The retail giant pegged the initial public offering price at between US$18 and US$20 per share. The company has been approved to list its common stock on the New York Stock Exchange (NYSE) under the ticker symbol ACI. 

The company, which operates more than 2300 stores across 35 states in the US including grocery stores under the Albertsons, Safeway, Vons, Jewel-Osco and other names as well as meal-kit company Plated first announced its intent to launch an IPO in March this year.

The move to commence the IPO comes few days after the retailer closed a transaction with Apollo Global Management in which the global alternative investment manager acquired a minority 17% stake in the grocery chain for US$1.75 billion.

At the time of announcing the deal in May this year, Vivek Sankaran, President and Chief Executive Officer of Albertsons Companies said that the investment, led by the Apollo Funds, represented a vote of confidence in both Albertsons business and its long-term strategy.

During its financial year ended February 29, 2020 the company reported continued momentum after registering a 2.1% growth in sales with improved performance on the top and bottom line.

Sales and other revenue during the period rose to US$62.5 billion from US$60.5 billion the previous year. Markedly, the retailer said that since the beginning of fiscal 2020, the company has experienced significant increases in customer traffic, product demand and overall basket size in stores and online as customers adjust to the circumstances around COVID-19.

As a result, identical sales increased 47% during the first four weeks of fiscal 2020, ending March 28, 2020, and increased 21% during the second four weeks of fiscal 2020, ending April 25, 2020.

Despite the uncertainties around Covid-19, the company still believes the business has compelling growth opportunities ahead via eCommerce penetration, expansion of the company’s innovative Own Brands portfolio, and merchandising and marketing initiatives.

Albertsons decision to go public is also part of the company’s long-term growth strategy. In 2015, Albertsons said it would go public, but dropped the idea later that year after other grocery companies saw weakness on Wall Street.

While the company is still optimistic that the new IPO will successfully go through, the retailer noted in a statement that “a registration statement, including a prospectus, which is preliminary and subject to completion, relating to these securities has been filed with the SEC but has not yet become effective.”

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