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Albertsons IPO is postponed

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BOISE, Idaho — Albertsons Cos. said that its planned initial public offering has been postponed indefinitely.

The announcement came on October 14, the day that Walmart shares fell 10% — their largest one-day decline in nearly 30 years — after the company warned that its earnings would decline in the fiscal year that begins in February.

Walmart’s gloomy forecast affected investor confidence in other retailers in the grocery sector as well. Kroger Co., for example, saw its share price fall by 3% that day.

Albertsons cited the market volatility as the reason it was postponing the offering. No new date was given.

In an updated prospectus filed earlier this month, Albertsons said it intended to sell 65.3 million shares, at an expected price of between $23 and $26 per share. The company had estimated that the offering would raise about $1.53 billion, and said the proceeds would be used to pay down debt.

The prospectus also included information on the company’s financial performance.

For the 12 months ended June 20, on a pro forma basis, Albertsons would have generated net sales of $57.9 billion, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.5 billion and free cash flow of $1.7 billion.

For the first quarter of fiscal 2015, Albertsons generated net sales of $18.1 billion, adjusted EBITDA of $728 million and free cash flow of $513 million.
Albertsons’ same-store sales, excluding Safeway, grew 7.2% in fiscal 2014 and 5.1% in the first quarter of fiscal 2015.

“We believe that the implementation of our playbook, together with other factors, including improved economic conditions and consumer confidence, will enable us to further accelerate this rate at Safeway,” the company stated in its prospectus. “We are currently executing on an annual synergy plan of approximately $800 million related to the acquisition of Safeway, which we expect to achieve by the end of fiscal 2018. We expect to deliver annual run-rate synergies of approximately $440 million by the end of fiscal 2015.”

As of June 20, Albertsons operated 2,205 stores across 33 states under 18 banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market and Carrs.


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