Albertsons prices cut initial public offering below target range, sources say

A woman pushes a grocery cart toward her car in front of an Albertson store in Denver, Colorado.

Matthew Staver | Bloomberg | fake pictures

US supermarket operator Albertsons Companies on Thursday sold fewer shares than expected at a lower-than-expected price in its initial $ 800 million public offering, according to people familiar with the matter.

Below-target pricing marked an apparent weakening in recent strong investor demand for new listings. On Wednesday, US stocks fell sharply as investors worried about the resurgence of coronavirus cases in the United States.

Boise, Idaho-based Albertsons sold shares in its IPO at $ 16 each, below its target range of $ 18- $ 20 per share, valuing the company at around $ 9.3 billion. Albertsons, majority-owned by private equity firm Cerberus Capital Management LP, reduced the number of shares sold in the IPO to 50 million from 65.8 million.

Albertsons, which operates eponymous stores, as well as the American supermarket chain Safeway and the Von grocery store, did not immediately respond to a request for comment.

The company went public after months in which its fortune was recovered in the coronavirus outbreak, as consumers stocked up on food while staying home. Albertsons sales in March and most of April increased 34% over last year.

However, rival supermarket chain Kroger said last week that the surge in demand for essential goods was fading as American households reconsider what they have on their shelves.

The reduction in the initial public offering came after heated discussions between insurers and Cerberus, which deliberated whether to abandon the offer as it had before, a source said.

Cerberus abandoned an initial public offering in 2015 and a proposed reverse merger with Rite Aid was canceled, which would also have made Albertsons public.

Albertsons shares will begin trading on the New York Stock Exchange on Friday under the symbol “ACI”. BofA Securities, Goldman Sachs, JPMorgan and Citigroup are the main underwriters of the IPO.