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Albertson’s files for IPO, but private-equity owner won’t cash out yet

A Safeway baker puts out fresh bagels  at the store in Wheaton MarylandA Safeway baker puts out fresh bagels  at the store in Wheaton Maryland
A Safeway baker puts out fresh bagels at the store in Wheaton, Maryland.Photograph by Gary Cameron — Reuters

Albertson’s Cos., the U.S.’s second-largest grocery store group that owns Safeway, Tom Thumb, Jewel-Osco and Acme, has filed documents for an initial public offering.

The filing represents a first step towards the exit for the private equity group Cerberus, which combined the group with Safeway Inc. in January. However, Cerberus isn’t selling any of its shares in the offering, according to The Wall Street Journal, but rather attracting new investors with the intention of cutting the group’s relatively heavy debt load. The company itself said the size of the IPO isn’t yet determined, and gave no details of its structure.

The WSJ said the filings show Albertson’s, which has over 2,200 stores spread across 34 states, has net debt (gross debt less cash) of just under $11 billion. If the marke valued it similarly to the natinon’s number one grocery chain Kroger Co. (KR), the IPO could value the company at around $16 billion, the WSJ said. It said the filings show the land owned by Albertson’s alone is appraised at $10.5 billion, implying that the actual grocery and drug business–under pressure from well-documented trends in the retail industry–commands a pretty modest valuation, despite having sales of over $57 billion (on a pro rata basis) in the year to Feb 28.