Albertsons Struggling To Sell Ipo

Albertsons struggling to sell ipo

AlbertsonsManagement StrategySupermarketsWall Street/Financials

Jul 09, 2015

by George Anderson

The wheeling and dealing continues at Albertsons Companies, Inc.

Albertsons struggling to sell ipo

Five months after the company, owned by a consortium led by Cerberus Capital, closed its deal to merge with Safeway and become the second largest supermarket chain operator in the U.S., it is planning an initial public offering.

According to reports, Albertsons will look to raise an as-yet unspecified amount of money on the heels of posting a loss in its latest fiscal year.

The Wall Street Journal estimates the company would have a market cap of $16.5 billion if it is valued similarly to Kroger (seven times earnings before interest, taxes, depreciation and amortization).

Virtually all of the reports on the IPO included mention of the current competitive challenges faced by Albertsons as a rationale for raising capital through a stock sale.

None, however, made clear how that would be accomplished as a result of the IPO.

Albertsons struggling to sell ipo

Opinions are that the only clear winner in a stock sale would be Cerberus Capital and its consortium partners including Kimco Realty Corp., Klaff Realty, Lubert-Adler Partners and Schottenstein Stores Corp.

It is not yet clear how much of Albertsons will continue to be owned by the group following the IPO.

Albertsons currently operates roughly 2,200 stores in 33 states and the nation’s capital under 18 different banners including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Acme, Jewel-Osco, Lucky, Shaw’s, Star Market, Super Saver, United Supermarkets, Market Street and Amigos.

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"I would be very cautious as an investor given the fact that the combined company has not yet demonstrated its ability to profitably compete as a merged unit."

"This is a good short-term move for the owners but maybe a long-term negative for the organization that is left to operate.

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You don’t see the synergies that Kroger has accomplished in their acquisitions due to the nature of the original Albertsons combination and the desire to swallow Safeway whole."

"I chatted with our food retail expert, Randy Evins, and he stated: "I am a bit worried for the good folks working at Albertsons/Safeway.

This stock sale seem pretty quick."

Albertsons struggling to sell ipo