Albertsons prices downsized IPO below target range, sources say

U.S. supermarket operator Albertsons Companies on Thursday sold fewer shares than expected at a lower price than planned in its $800 million initial public offering, according to people familiar with the matter.

The below-target pricing signaled an apparent softening in recent robust investor demand for new listings. On Wednesday, U.S. stocks fell sharply as investors worried about a resurgence of coronavirus cases in the United States.

Boise, Idaho-based Albertsons sold shares in its IPO at $16 apiece, below its $18-$20 per share target range, valuing the company at around $9.3 billion. Albertsons, majority-owned by private equity firm Cerberus Capital Management LP, cut the number of shares sold in the IPO to 50 million from 65.8 million.

Albertsons, which operates namesake stores as well as U.S. supermarket chain Safeway and grocer Von, did not immediately respond to a request for comment.

The company went public following months in which its fortunes have picked up in the coronavirus outbreak, as consumers stocked up on food while staying at home. Albertsons’ sales in March and most of April were up 34{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} from last year.

However, rival supermarket chain Kroger said last week the surge in demand for essential goods was fading as American households reconsider what they have on their shelves.

The downsizing of the IPO came after heated discussions between the underwriters and Cerberus, which deliberated whether to walk away from the offering as it had done so before, one source said.

Cerberus abandoned an IPO in 2015 and a proposed reverse merger with Rite Aid, which also would have taken Albertsons public, was canceled.

Albertsons’ shares are due to start trading on the New York Stock Exchange on Friday under the symbol “ACI.” BofA Securities, Goldman Sachs, JPMorgan and Citigroup are the lead underwriters on the IPO.