After having to delay its planned mid-October IPO launch due to the volatility of the financial markets, Albertsons Companies filed an amended S-1 stock prospectus form on November 23, indicating it would resume its effort to take the Cerberus Capital Management-controlled supermarket chain public.
Financial sources told us that it is likely that Albertsons would have to conduct another “road show” with analysts early next year and if all goes well then, it could become a publicly-traded company toward the end of the first quarter of 2016.
The original road show went very well according to several sources. To that extent, Albertsons believed it had successfully sold its offering by the middle of October. However, at almost that same time, Wal-Mart, at its annual investors’ day, told analysts that earnings would be pressured due to competition and its planned major investment into its digital portfolio. That news not only significantly reduced Wal-Mart’s market cap, it adversely impacted most of the publicly-traded retailers in several industries.
Albertsons’ new prospectus is virtually the same as the original one filed in early July. The Boise, ID-based retailer expects to price its 5.3 million shares at $23-$26 per share with an overallotment of an additional 9.8 million shares. If all shares available were sold at the top end of the price spectrum, the offering would raise approximately $1.95 billion.
Albertsons intends to list its shares on the New York Stock Exchange under the symbol ABS.
In describing its finances in the prospectus, Albertsons said: “For fiscal 2014 on a pro forma basis, we would have generated net sales of $57.5 billion, adjusted EBITDA of $2.4 billion and free cash flow (which we define as adjusted EBITDA less capital expenditures) of $1.5 billion. For the 12 months ended June 20, 2015, on a pro forma basis, we would have generated net sales of $57.9 billion, adjusted EBITDA of $2.5 billion and free cash flow of $1.7 billion. For the first quarter of fiscal 2015, we generated net sales of $18.1 billion, adjusted EBITDA of $728 million and free cash flow of $513 million. In addition to realizing increased sales, profitability and free cash flow through the implementation of our operating playbook, we expect synergies from the Safeway acquisition to enhance our profitability and free cash flow over the next few years.
Albertsons said it intends to use the net proceeds from this offering to repay certain existing debt, to pay fees and expenses related to this offering and for general corporate purposes.
Also of note in the prospectus was the news that none of its existing shareholders, including principal equity partner Cerberus Capital Management, would sell any of their holdings. Those entities would continue to control about 80 percent of the shares of the new publicly-traded company.
Cerberus and its partners have been building the grocery chain through a series of deals since 2006, including its merger earlier this year with Safeway, which made it the second largest conventional grocery in the country after Kroger, with annual sales of $57.5 (that total has increased with the acquisition of 71 former A&P stores) billion at its 2,300 stores throughout the U.S.