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Albertsons falters in debut as $800 million IPO disappoints

An Albertsons grocery store in San Diego. Private equity firm Cerberus and other backers of the supermarket chain sold just 50 million shares to raise $800 million.
An Albertsons grocery store in San Diego. Private equity firm Cerberus and other backers of the supermarket chain sold just 50 million shares to raise $800 million.Bloomberg photo by Bing Guan

Albertsons, owner of Shaw’s and Star Market supermarkets, emerged Friday from 14 years of private ownership by Cerberus Capital Management with a whimper as its shares failed to take off after a shrunken initial public offering.

The stock opened in New York at $15.50, below the targeted price range of $18 to $20. Private equity firm Cerberus and other backers of the supermarket chain sold just 50 million shares to raise $800 million, having earlier offered 65.8 million shares to potential investors. The shares fell 3.44 percent to close at $15.45.

While the pandemic has boosted the grocer’s business, the company had total debt of $8.7 billion as of its last fiscal year, according to its filings. That makes it more levered than US supermarket rivals Sprouts Farmers Market Inc. and Grocery Outlet Holding Corp., according to data compiled by Bloomberg. It’s also behind rivals such as Walmart and Kroger in rolling out popular services such as free curbside pickup of online orders.

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Chief Executive Officer Vivek Sankaran said in an interview the company has gained market share in recent months thanks to a “significant increase’’ in new shoppers, as Americans shifted to consume more food at home. He said the company will invest more to accelerate its e-commerce business, which grew 278 percent in the first 12 weeks of its fiscal year. Albertsons’ own private-label food brands, are another opportunity for growth, he said.

Albertsons’ public debut comes after a failed attempt five years ago. In 2015, the company filed for a listing to raise as much as $1.7 billion before eventually withdrawing that plan.