Albertsons yesterday said that it is going ahead with an initial public offering that "could net as much as $1.51 billion for existing shareholders led by Cerberus, the private equity group," the Financial Times reports.
FT writes that Albertsons "is seeking to take advantage of a rebound in the stock markets," and is hoping that this attempt to go public will be more successful than other efforts. It aborted one attempt in 2015 because of unfriendly markets, and then tried to do it through a proposed acquisition of Rite Aid, which also didn't work out.
The Wall Street Journal writes that "the initial public offering would give Albertsons a more-than-$10 billion valuation if its stock prices at the midpoint of its $18-to-$20 target range, according to a person familiar with the matter. The company’s stock is likely to begin trading publicly late next week, according to people familiar with the matter."
The Journal points out that "the offering won’t yield proceeds for Albertsons because the stock sale is coming from existing shareholders. The IPO will allow Cerberus Capital Management LP, Albertsons’s private-equity backer, to start cashing out of a roughly 15-year investment. Cerberus is expected to own 31.9% of Albertsons following the offering, according to the filing."
MarketWatch writes that Albertsons is banking on recent results during the pandemic giving it "momentum," and that it will "continue delivering profitable growth going forward." The coronavirus pandemic "has significantly increased" demand for food-at-home and online sales, and the company has built up its curbside pickup and other systems that it believes "will meaningfully improve the overall customer experience and enable us to drive growth and market share," it said.
- KC's View:
I'll say the same thing here that I've been saying about every other company celebrating strong results driven by pandemic demand.
It wasn't hard to have strong sales over the past few months. If I had enough toilet paper, my garage could've had strong sales. What will be harder is maintaining momentum … of figuring out how to propel the company forward without being complacent … and deciding how the company should be different post-pandemic, and then implementing that strategy.
Consumers don't give a rat's patootie about IPOs. What they care about is whether a store - their store - is relevant and resonant. The IPO they care about is whether a store is Intuitive, Pertinent, and Outstanding.