- Offering will cut debt after last year's takeover of Safeway
- Proceeds may reach $1.76 billion with over-allotment option
Albertsons Cos. plans to raise about $1.53 billion in an initial public offering to pay down debt after the deal that brought the U.S. supermarket chain together with Safeway Inc.
The sale will consist of 65.3 million shares at $23 to $26 each, according to a filing Friday with the U.S. Securities and Exchange Commission. The company’s estimate of the proceeds is based on the mid-point of the price range, and would rise to $1.76 billion should underwriters exercise an option to purchase additional shares.
Albertsons, backed by Cerberus Capital Management, took on debt of more than $6 billion to acquire grocer Safeway last year. The IPO will help reduce leverage following the deal, which created the second-biggest supermarket chain in America behind Kroger Co. The Boise, Idaho-based company operates more than 2,200 stores, which include the Vons, Jewel-Osco, United Supermarkets and Pavilions brands.
The takeover of Safeway is expected to generate annual synergies of $800 million by the end of fiscal 2018, the company said in Friday’s statement. Associated one-time costs will be about $1.1 billion, or $690 million net of proceeds from asset sales, it said.
Albertsons posted a net loss of $385 million, including the Safeway acquisition, on $57.5 billion in sales in the 53 weeks ended Feb. 28.
The company will trade on the New York Stock Exchange under the ticker ABS.