Albertsons delays initial public offering of stock

Albertsons postponed its initial public offering this week after Wal-Mart lowered its sales forecast, prompting worries about turmoil in the retail sector.

The Boise supermarket chain is owned by New York private equity firm Cerberus Capital Management and several partners. They had hoped to raise up to $1.9 billion by selling 65 million shares at around $26 each.

Albertsons on Wednesday was set to become the second-biggest IPO of the year, selling a piece of itself on the New York Stock Exchange under the symbol ABS. But CNBC, citing unnamed sources, said institutional investors interested in the IPO were gravitating toward a price of $17 a share, much less than Albertsons and its underwriters wanted.

Albertsons has grown fast in the past three years because of acquisitions. Albertsons Inc., a Boise public company, broke up in 2006, selling some of its supermarkets to the Cerberus consortium and some to Minnesota’s Supervalu Inc. Two years ago, Cerberus reunited the stores it still owned with Supervalu’s remaining stores. Early this year, Albertsons bought the larger Safeway chain, mostly with borrowed money.

It is the biggest company based in Idaho, operating more than 2,200 stores in 33 states under 18 banners and employing 265,000 people.

CNBC quoted an unnamed source Thursday saying Albertsons would likely try again before Thanksgiving.

Wal-Mart’s news chilled the broader market. Wal-Mart’s own shares fell 10 percent Wednesday, the biggest one-day plunge in decades. Kroger Co., an Albertsons rival that operates Fred Meyer and other banners, fell 3 percent. Wal-Mart fell an additional 1 percent Thursday, while Kroger rose two-tenths of 1 percent.

A different, highly anticipated initial public offering came up short of expectations on Wednesday, illustrating how challenging the market has become for stock debutants.

Given its large size, First Data, another payments company, has been seen as a bellwether for the current IPO market. The company, owned by the private equity firm Kohlberg Kravis Roberts, had been seeking to raise as much as $3.2 billion. But Wednesday evening, First Data priced its offering at $16 a share – well below its expected price range of $18 to $20.

Other planned offerings have been delayed or canceled outright in recent weeks. While the IPO plans of the fast-growing mobile payments company Square and the sports car maker Ferrari have generated interest in the market, the troubled offerings raise questions about the reception they and others prepared to go public will receive.

The luxury retailer Neiman Marcus, which looked ready to return to the public markets by the end of the year, decided to pursue a listing in 2016. And Digicel, a telecommunications company, pulled out of its planned $2 billion IPO last week.

“Recent volatility in equity markets has seen a number of IPOs listing at a discount to their signaled price range, and this was a less attractive route for us,” Denis O'Brien, Digicel’s chairman, said at the time. Advisers to companies seeking to list say that the wild swings of the stock markets this year have taken a toll on new stock sales.

These are just the recent signs of how far the market for initial public offerings has fallen after several banner years.

Roughly 36 percent fewer IPOs, or 144 overall, priced this year compared with the same time last year, according to data from Renaissance Capital. And those that did price fell an average of 3.5 percent from their offering price.

First Data will remain the biggest IPO of the year, with a $2.6 billion offering. Shares of First Data will begin trading on Thursday on the New York Stock Exchange under the ticker symbol FDC.

This story was originally published October 15, 2015 at 8:31 AM.