Grocer Albertsons Launches IPO Process

Albertsons Cos., the second-largest U.S. grocery-store chain following its $9.4 billion purchase of rival Safeway Inc. earlier this year, started the process of going public on Wednesday.

The Boise-based grocer, privately owned by an investor group led by Cerberus Capital Management, said in a regulatory filing that it plans to raise up to $100 million in an initial public offering. That figure, used to calculate registration fees, is likely to change.

In addition to Safeway stores, Albertsons operates grocers under banners including Jewel-Osco, Acme and Tom Thumb. To win regulatory approval for its Safeway acquisition, Albertsons agreed to divest 168 stores.

As of June, the store tally was 2,205 locations in 33 states plus the District of Columbia. Kroger Co. is the only U.S. grocery-store chain larger than Albertsons.

Last year, Albertsons swung to a loss of $1.2 billion on $27.2 billion in sales. On a pro forma basis—which includes Safeway performance and strips out certain merger-related charges, among other things—the company said it would have lost $385 million and reported $57.5 billion in sales. Sales at locations open at least a year rose an adjusted 4.6% last year, driven by growth in SVU Albertsons Stores.

Albertsons said it intends to use the proceeds to pay down debt and for general corporate purposes. In its filing, the chain also said it plans to grow its store base by opening new stores and through potential acquisitions.

The plans to go public come as mainstream grocers are increasingly pinched from both high-end stores catering to the growing consumer preference for fresh and natural items, like Whole Foods Market Inc., and discount options like Wal-Mart Stores Inc. According to the company, its decentralized operating structure enables the company to respond to local tastes and preferences.

Albertsons also cited competition from e-commerce, where companies like FreshDirect operate, and said it has a growing Internet presence.

The IPO is being led by Goldman Sachs & Co., Bank of America Merrill Lynch, Citigroup, Morgan Stanley and Lazard.

Write to Lisa Beilfuss at [e-mail]

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