Slimmed-Down Albertsons IPO Raises $800M

The long-awaited initial public offering (IPO) of Idaho-based grocery chain Albertsons went ahead on Friday (June 26) after often-fraught years of planning. Now trading on the New York Stock Exchange under the symbol ACI, the chain sold 50 million shares at $16 per share, bringing in $800 million – well below the 68 million shares and $1.5 billion fundraise once anticipated. Shares eased down about 1 percent to $15.80 at 2 p.m. ET.

Albertsons’ IPO is the culmination of a saga that began in 2006 when private equity firm Cerberus Capital Management took a major position, with plans to grow the chain into one of North America’s gargantuan power grocers. That vision appeared to be coming to fruition with Albertsons’ 2015 purchase of rival chain Safeway for $9.2 billion – but a heavy debt load and pandemic-era digital shifts in grocery shopping have cast a shadow on parts of the sector.

Along with Safeway, the Albertsons portfolio includes Vons, Pavilions, Randalls, Tom Thumb, Carrs, Sav-On, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street, Amigos and United Express. Despite scale and geographical coverage, its sales growth has lagged. An attempt to merge with the Rite Aid Corp. in 2018 got the cold shoulder primarily for this reason. That was well before pandemic-related mayhem disrupted, then fundamentally restructured, the grocery sector to favor well-heeled operators like Amazon and Walmart.

Though Albertsons’ sales swelled along with other grocery chains during the lockdowns, sector analysts generally agree that supermarket buying patterns are now returning to normal—with the notable exception that much of that shopping has permanently moved online.

“Albertsons’ sales in March and most of April were up 34 percent from last year, yet the scaling back of the IPO … indicates that some investor skepticism lingers,” Reuters noted.

A string of grocery chain bankruptcies in recent years, including venerable brands A&P/Pathmark, Winn-Dixie and Marsh Supermarkets, didn’t help in getting Albertsons’ IPO the necessary traction. This is despite the grocer recently announcing that it is deploying artificial intelligence (AI)-based shopping assistants in a number of locations. “Supporting our customers’ needs as quickly, safely and efficiently as possible is of utmost importance to us,” Chris Rupp, EVP and chief customer and digital officer at Albertsons Companies, recently told PYMNTS.

“We are pleased to offer shoppers multiple options when it comes to ordering online – from in-store pickup to contactless delivery. Our associates are fully committed to assisting our customers in the stores, and now we can extend that same Albertsons experience to our digital channels, ensuring our customers’ needs are met however they choose to shop,” Rupp said.