Albertsons Turns Lower in Wall Street Debut

Albertsons begins trading after raising only $800 million in the offering, below a possible $1.3 billion if the shares had been priced at the high end.

Albertsons  (ACI) - Get Report traded lower Friday as the supermarket operator made its debut on Wall Street.

Shares of the Boise, Idaho-based company were down 1.62% to $15.74.

The initial public offering of the Boise, Idaho-based supermarket operator was priced at $16 a share, lower than expected, and fewer shares were sold than anticipated.

The pricing came in below the range of between $18 and $20 a share the company was seeking. Albertsons sold 50 million shares, below expectations of 65.8 million shares.

Albertsons raised only $800 million in the offering, below a possible $1.3 billion if the shares had been priced at the high end.

The offering values Albertsons at about $9.3 billion. Albertsons won't receive any proceeds from the offering since the share sale came from existing shareholders. Cerberus Capital Management, Albertsons’s private-equity backer, will own 31.9% of Albertsons following the offering.

The company is controlled by 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 shopping center developer.

"Our Sponsors control us and will continue to be able to control the election of our directors," the company said it its prospectus, "determine our corporate and management policies and determine, without the consent of our other stockholders, the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. "

The IPO was the first in the U.S. to price below its marketed range since GFL Environmental's GFL $1.4 billion offerings on March 3, according to Bloomberg.

Albertsons operates stores under the Albertsons, Safeway and Vons names. The company also owns Plated, a meal-kit company. 

Albertsons had 2,252 stores across 34 states and 270,000 employees as of fiscal 2019 and is the No. 2 grocer in the nation after Kroger KR by the number of stores.

The company acquired Safeway in 2015 for $9.4 billion.

Sales last year totaled $62.5 billion, up from $60.5 billion in 2018, and the company said in its SEC filing that "we have achieved nine consecutive quarters of positive identical sales growth."

"We have a significant amount of indebtedness," the company said, noting that as of February 29, it had about $8.2 billion of debt outstanding and $667 million in finance lease obligations.