Dive Brief:
- Albertsons has sold 17.5% of its stock to private equity firm Apollo Global Management for $1.75 billion, bringing the grocer a cash infusion as it prepares to go public, according to a press release. The transaction is expected to closed June 15.
- Kimco Realty, owners of grocery-anchored shopping centers across the country, which currently holds approximately 9.29% of Albertsons, will drop its stake in the grocer to about 7.5% in connection with the Apollo investment.
- An investment group led by Cerberus Capital Management, another private equity firm, will continue as owner of Albertsons. Cerberus has had a stake in Albertsons, which operates grocery stores under its own name as well as banners including Safeway, Vons and Jewel-Osco, since 2006.
Dive Insight:
The investment by Apollo comes as Albertsons, which like other grocers is riding a wave of strong sales driven by the pandemic, shores up its balance sheet ahead of an expected initial public offering.
Albertsons announced its plans to go public on March 6 — just before the pandemic took hold of the economy and ignited a surge in grocery sales. The company, which had $62.5 billion in revenue during its most recent fiscal year, reported a 34% year-over-year increase in sales between March 1 and April 25.
Albertsons has been focusing on reducing its debt pile and owed creditors $8.5 billion as of Feb. 29, down from more than $10.4 billion a year earlier. The company reported net income of $466.4 million during its last fiscal year, up from $131.1 million the previous year.
The improvement in its financial condition could help the company finally become a publicly traded company after two aborted efforts during the past several years.
The supermarket operator struck an arrangement in early 2018 to acquire Rite Aid in a transaction that would have allowed it to go public but called off the deal that August because Rite Aid shareholders felt the proposed $24 billion combination undervalued the pharmacy chain.
In 2015, Albertsons postponed its plans to go public after determining that the stock market was too unstable.
Apollo's investment in Albertsons is one of a few in the grocery space for the private equity group. The company's experience in the sector includes current ownership of Smart & Final, as well as a previous investment in Sprouts.
