Albertsons Companies Inc., the No. 2 U.S. supermarket company, whose brands also include Safeway, has filed for an initial public offering of stock, according to a filing Wednesday.
The Boise company did not say how many shares it would offer, what they would cost or where those shares would trade. It expects to raise $100 million from the offering, though that figure is only an estimate used to calculate a filing fee. Proceeds from the offering will be used to repay debt and for general expenses.
Albertsons closed its $8 billion buyout of Safeway in January, drastically increasing the company’s size. It is now the largest company based in Idaho, measured by revenue and by employment, dwarfing iconic Gem State companies such as Micron Technology Inc. and J.R. Simplot Co.
Albertsons is owned by a consortium of firms, led by New York private-equity company Cerberus Capital Management.
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“Typically, Cerberus likes to monetize its acquisitions sooner, so I’m not surprised” with the initial public offering, said Burt P. Flickinger III, managing director of Strategic Resource Group, a consumer-industry business consulting firm in New York City.
“I think part of it is that (grocery competitor) Kroger’s stock is up approximately 300 percent so far during the first half of this decade,” and during periods of uncertainty in stock markets, investors gravitate toward reliable food-and-drug retailers, Flickinger said. “It’s really the right time for Albertsons to have an IPO.”
Joe Albertson founded the first Albertsons store in 1939 at the northeast corner of 17th and State streets in Boise. Albertsons still owns a store there.
The original Albertsons Inc. chain, which was publicly owned, was broken up and sold in 2006 after years of struggling for profitability. Part of the chain went to the Cerberus consortium and part, including the Idaho stores, went to Minnesota-based Supervalu. Both owners closed struggling stores.
The chain was reunited in 2013 when Supervalu gave up its quest to turn its stores around, and Cerberus bought them.
Albertsons now employs about 265,000 full- and part-time workers.
Flickinger said the company’s decision to go public could mean more job security and advancement opportunities for Albertsons’ workforce.
The SEC document said the company is working on a “synergy plan” following the Safeway acquisition, and it includes “simplifying business processes and rationalizing headcount.”
The company laid out its strategies in the SEC document. They include:
• Upgrading, remodeling and relocating stores.
• Expanding the chain by acquiring and opening new stores. “We evaluate strategic acquisition opportunities on an ongoing basis as we seek to strengthen our competitive position in existing markets or expand our footprint into new markets,” the document said.
• Offering more and better organic, natural and fresh meat, produce, deli and bakery goods.
• Expanding on the existing store brands, such as O Organics, Open Nature, Eating Right and Lucerne brands.
• Expanding on stores’ loyalty programs, which include fuel rewards; and using customer analytics to push digital marketing and mobile apps, as well as online and home-delivery services.
• Capitalizing on demand for health and wellness services by, for example, drawing customers to prescription-transfer programs and partnerships with hospitals and clinics. Why? The company said its pharmacy customers tend to spend 2.5 times more each week than nonpharmacy customers.
• Using the now-combined Albertsons and Safeway to get better deals with vendors and take advantage of “efficiencies in manufacturing and distribution.” All stores, distribution centers and systems such as payroll will use the Safeway information technology systems, for example.
Albertsons had revenue of $27.2 billion in fiscal 2014, but the addition of Safeway boosts that revenue figure to $57.5 billion, which makes it the second-largest traditional supermarket chain in the U.S., behind Kroger Inc.
The company said in its filing to the SEC that in fiscal year 2014, sales grew 8.2 percent in the stores Supervalu used to own and 9.1 percent in other Albertsons stores. Two years earlier, before they were acquired, those stores’ sales had dropped 4.8 percent, the company said.
Since January, the company’s workforce also has grown, from 250,000 to about 265,000.
“Our Safeway stores delivered identical store sales growth of 3 percent in fiscal 2014, compared to 1.4 percent in fiscal 2013, and we believe that implementation of our playbook will enable us to further accelerate our sales growth,” the new Albertsons Cos. said in the SEC filing.
Albertsons now operates a total of 2,205 stores in 33 states under 18 names. Safeway locations make up 1,247 of those stores. Other banners under Safeway operations include Vons, Tom Thumb and Randalls. The company operates 456 Albertsons supermarkets in 16 states. Jewel-Osco, Shaw’s, Acme, United Supermarkets, Pavilions and Star Markets are part of the company.
Its headquarters is in Boise on ParkCenter Boulevard. The company owns that 250,000-square-foot building. It also has corporate offices in Pleasanton, Calif., and Phoenix and is in the process of consolidating offices, the company said in its SEC filing.
Cerberus will be the big winner in a stock offering, Flickinger said.
“Cerberus was in effect the private equity ‘banker’ that provided a lot of the risk capital,” he said. Albertsons CEO “Bob Miller is a well-deserved winner, because when Bob Miller took over 10 yrs ago ... the company was in deep distress financially, and left on its own Albertsons may have failed financially without the heroic rescue of Bob Miller and his tremendous team (leading) one of the biggest turnarounds in food and drug retail in the past 50 years.”
Miller, 71, is listed as CEO in the SEC filing with an employment contract set to expire Jan. 30, 2018. He and other top executives received pay increases this year, to reflect their roles in the post-Safeway acquisition company.
The company said Miller’s base salary increased Jan. 30 to $2 million with his promotion to executive chairman, up from his fiscal 2014 base salary of $1.5 million.
Miller’s total compensation in the last fiscal year was $103.3 million, including a $15 million bonus and $74 million in “unit awards,” according to the SEC filing. (The “unit awards” appear to correspond with “stock awards” for publicly traded companies.)
Other top executives made between $1.3 million and $74.2 million.
Albertsons officials declined to comment.