Outside an Albertsons grocery story in California in early March.
Photo: Dylan Stewart/Zuma PressGrocery-chain operator Albertsons Cos. kicked off its IPO roadshow Thursday, setting itself up to be the next notable company to tap a warming market for new issues.
The initial public offering would give Albertsons a more-than-$10 billion valuation if its stock prices at the midpoint of its $18-to-$20 target range, according to a person familiar with the matter. The company’s stock is likely to begin trading publicly late next week, according to people familiar with the matter.
The offering won’t yield proceeds for Albertsons because the stock sale is coming from existing shareholders. The IPO will allow Cerberus Capital Management LP, Albertsons’s private-equity backer, to start cashing out of a roughly 15-year investment. Cerberus is expected to own 31.9% of Albertsons following the offering, according to the filing.
After suffering through a deep freeze for most of the year amid the coronavirus pandemic, the IPO market has heated up in recent weeks, powered by strong debuts from Warner Music Group Corp. and ZoomInfo Technologies Inc. Albertsons, which made its IPO plans public in March, is one of the most notable IPOs on tap for 2020.
Albertsons, based in Idaho, is the nation’s second-biggest grocer after Kroger Co. by number of stores. It operates its namesake chain as well as Jewel Osco, Safeway and Vons. It also owns Plated, a meal-kit company.
Grocers have recorded strong sales throughout the pandemic as consumers load up on staples and cook more at home. Albertsons said same-store sales increased 47% in March and 21% in April. The company’s performance had already started improving under Chief Executive Vivek Sankaran, who joined the company in 2019.
This isn’t the first time Albertsons has attempted to go public. The grocer planned to list shares in 2015, but ultimately pulled its offering due to lackluster performance of other retail stocks and investor distaste for companies with large debt loads. In 2018, Albertsons tried to acquire most of Rite Aid Corp., but that deal ultimately fell through due to investor pushback.
Albertsons has decreased its net debt by about $3 billion since the end of fiscal 2017. The company’s 2019 total net leverage was 2.9 times its Ebitda, or earnings before interest, taxes, depreciation and amortization, down from 3.5 times a year ago.
Albertsons will list its shares under the ticker ACI on the New York Stock Exchange, it said. Bank of America Corp. and Goldman Sachs Group Inc. are leading the offering.
Ahead of its IPO launch, Albertsons also took the unusual step of arranging a $1.75 billion convertible preferred-stock investment from Apollo Global Management Inc., a way of bringing in cash and a new institutional investor and bolstering confidence in the offering, according to people familiar with the deal.
—Allison Prang and Alexander Osipovich contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Jaewon Kang at jaewon.kang@wsj.com
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