Idaho’s biggest company takes first step toward offering stock for public sale
Boise’s Albertsons Cos., Idaho’s biggest company and the nation’s second-largest grocery chain, took the first step Friday toward selling stock to the public.
The company, which is controlled by a New York private equity firm, filed a registration form with the U.S. Securities and Exchange Commission for a proposed initial public offering of stock. The number of shares to be offered and their price have not been determined.
The offering would pave the way for Albertsons to end 14 years of ownership by Cerberus Capital Management and several real estate investment partners.
It’s actually the second time Cerberus has taken this step. Plans for an IPO were announced five years ago, but Albertsons withdrew that offering to await more favorable market conditions.
Joe Albertson founded the company in 1939 with a store at 16th and State streets. A successor store still stands just north of the original.
In 2006, the original Albertsons Inc. broke apart amid continuing losses. Supervalu, a Minnesota grocery wholesaler, bought most of the company, including all the Albertsons supermarkets in Idaho and various chains under other names. Cerberus led a private-investment consortium that bought 660 supermarkets carrying the Albertsons name — stores Supervalu didn’t want — in the South and Southwest.
That resulted in two chains under the Albertsons banner. Both shrank. Supervalu failed to make its stores profitable, and in 2013 the Cerberus consortium, thriving with its 190 remaining Albertsons stores (still run quietly from Boise), bought Supervalu’s 877 remaining stores carrying multiple banners. What was left of the old company was reunited.
Then, in 2015, Albertsons bought California-based Safeway, an even bigger company. While gaining 1,325 stores, Cerberus saddled Albertsons with $8.9 billion in debt.
Albertsons announced plans for an IPO of 65 million shares but backed out after investors looked to pay $17 a share, much less than the $23 to $26 that Cerberus and its partners wanted.
In 2018, Albertsons planned once again to go public after agreeing to buy most of drugstore chain Rite Aid Corp. But the companies abandoned their $24 billion merger after one of Rite Aid’s largest investors criticized the deal as bad for Rite Aid shareholders. The IPO was shelved again.
Albertsons suffered heavy losses between 2014 and 2018 but has improved its bottom line since. The company has remodeled stores and opened larger stores geared toward foodies such as the Broadway Avenue Albertsons in Boise and the Albertsons Market Street store in Meridian.
The company also has invested in technology, sold off some of its real estate and added home delivery and store grocery pick-up options.
Albertsons ended its most recent quarter in November with $8.3 billion in debt, down from $10.5 billion a year earlier, according to an earnings report last week. Albertsons reported a 2.7% increase in quarterly sales in stores open at least one year.
It was the eighth straight quarter in which Albertsons reported positive same-store sales. And it was the second straight quarter — and the fourth in the last five — in which Albertsons’ same-store sales outpaced rival Kroger, according to Winsight Grocery Business, an industry publication. Kroger operates Fred Meyer and other chains.
The Wall Street Journal reported in January that Albertsons had updated its IPO documents in confidential filings with the SEC. The Journal reported that executives from Albertsons and Cerberus debated whether to go public now or to continue making improvements that could lead to a higher price in the future.
Albertsons reports that it had $61.1 billion in sales in its most recent 12 months. Boise’s Micron Technology Inc., Idaho’s second-largest company, reports sales of $20.6 billion in its latest 12 months.
Albertsons employs 267,000 people nationwide, compared with Micron’s 37,000 worldwide, though Micron employs more people — about 6,000 — in the Treasure Valley.
Albertsons today operates 2,260 stores under a number of banners, including Safeway, Vons, Jewel-Osco and Haggen. By revenue, it is half the size of Kroger, which reported $121 billion in revenue last year.
A prospectus has not been issued for the stock sale. When available, copies will be available from BofA Securities.
This story was originally published March 6, 2020 at 2:53 PM with the headline "Idaho’s biggest company takes first step toward offering stock for public sale."
