Albertsons' Reduced IPO Struggles to Gain Interest
Albertsons Cos. long-awaited initial public stock offering received a lukewarm response from investors during its first day of trading.
Shares priced at $16 closed down 3% to end the first day of trading at $15.52 on June 26. The decline is noteworthy considering the company had reduced the size of the offering to 50 million shares from 65.8 million shares and also reduced the initial trade price from earlier range of $18 to $20 provided on June 18.
Early on Friday as shares began trading under the ticker symbol ACI, CEO Vivek Sankaran appeared on the financial network CNBC and described the volatile market conditions that served as a backdrop for the IPO.
“It is so hard to predict what is happening in the market anymore. It is so different from the beginning of the week to the end the week,” Sankaran said during an interview with host Carl Quintanilla. “We’re just proud that in this extremely difficult environment, in the middle of a pandemic, we were able to IPO the company. It was a great accomplishment for us and we are looking at the long term.”
The IPO ends a five-year-long odyssey that began the year after Albertsons and Safeway announced their merger in 2014. The combined company tried to go public in 2015, looking to raise as much as $1.6 billion, but then pulled the offering amid undesirable market conditions. In 2018, Albertsons attempted to go public by acquiring Rite Aid Corp. in a $24 billion merger, but the companies eventually abandoned the transaction.
Last month, prior to pricing of the offering being revealed, Apollo Global Management Inc. and a group of other investors announced they had acquired $1.75 billion of convertible preferred shares in Albertsons Cos., representing a 17.5% stake in the company.
Albertsons received none of the proceeds from the IPO as the selling shareholders were all various private equity firms who will continue to hold roughly three fourths of the company’s outstanding shares.
Albertsons operates 2,252 retail stores with 1,726 pharmacies, 402 associated fuel centers, 23 dedicated distribution centers and 20 manufacturing facilities. The company’s stores predominantly operate under the banners Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street and Haggen. Albertsons is No. 8 on The PG 100, Progressive Grocer’s 2020 list of the top food retailers in North America.