Is now finally the time for Albertsons’ IPO?
Albertsons is once again back on its way to an initial public offering, but with all that has been going on in the world, it may be a strange time to consider going public.
The grocer announced that it is planning to raise up to $1.32 billion with 65.8 million shares being sold by certain selling stockholders at an indicative price range of $18 to $20 per share, according to Reuters.
The road to an IPO has been a long one for Albertsons, which has twice been on the verge of going public since the chain was picked up by private equity firm Cerberus Capital Management in 2006.
In 2015, Albertsons took a couple of stabs at an IPO, but perceived slumps in the grocery segment led the chain to table the idea.
Then in March of 2020, Albertsons announced that it would be filing for an IPO again after reducing its year-over-year debt significantly, improving same-store sales through technology investments and demonstrating big gains in private label products. Albertsons had made other tech-forward moves to modernize its operations and court new types of shoppers as well in the lead up to the announcement. For instance, in 2018 the chain launched an online marketplace that allows smaller CPG brands to sell and ship food and wellness products directly to consumers.
The company did not move forward in March as the announced date came within a few weeks of the start of the novel coronavirus pandemic in the U.S.
The pandemic threw the country and the stock market into chaos. The grocery industry was shaken by a spike in business due to the closure of restaurants and unprecedented demand for online pickup. Further, grocers were dealing with compromised in-stock positions due to rampant panic buying of staples on one hand and supply chain disruptions in the meat industry and elsewhere on the other.
Despite the pandemic’s peak being hectic for grocery, Reuters characterized the increased demand and even panic buying/stockpiling by customers as having been of benefit to Albertsons and its 20 banners.
- U.S. grocer Albertsons expects IPO to raise up to $1.3 billion – Reuters
- Will the second time be the charm for Albertsons’ IPO? – RetailWire
- Albertsons aims for IPO re-do at lower price, considers downsize – CNBC
- Albertsons launches an online marketplace for small CPG brands – RetailWire
DISCUSSION QUESTIONS: Is now the time for Albertsons to return to pursuing an IPO? What advantages or disadvantages might there be in trying to raise money now given the instability of the market due to the pandemic?