IPO Market Hiccup As Albertsons Offering Fails To Meet Expectations In Both Price And Scale

Albertson’s initial public offering is priced below expectations, and the number of shares offered also disappointed, leading to a jolt for the IPO market.

What Happened

The grocer sold 50 million shares and raised $800 million at $16 per share, according to sources of the Wall Street Journal.

Albertsons was hoping to sell 65.8 million shares priced between $18 and $20 per share. The shares are to be listed under the ticker “ACI” on Friday at the New York Stock Exchange. 

According to the WSJ, companies have raised $12 billion in the U.S. IPO market so far in June. Strong investor demand has allowed some companies to price above expectations, but Albertsons failed to follow a similar course.

Why It Matters

The Idaho-based company is the second-largest grocer in the United States after Kroger Co. KR in terms of retail sales, according to Statista, a market data web portal. 

The disappointing pricing is leading to questions on the performance of Albertson’s shares at their trading debut, noted WSJ. 

All stock on offer at the IPO came from existing shareholders, including billionaire Stephen Feinberg's Cerberus Capital Management.

The IPO will allow Cerberus Capital, which is a private-equity backer in Albertson’s, to begin cashing out of its 15-year investment in the grocer.

Undertakers for the public offering include JP Morgan Chase & Co JPM, Citigroup Inc C, BofA Securities, the investment bank division of Bank of America Corp BAC and Goldman Sachs Group Inc’s GS subsidiary Goldman Sachs & Co. LLC.