(Reuters) — Albertsons Cos Inc, the second-largest U.S. grocery chain, said it expected its initial public offering to price at between $23 and $26 per share, valuing the company at up to $12.35 billion.
Cerberus Capital Management LP will move ahead with the IPO despite volatile stock markets, underscoring the private equity firm’s confidence that it can fetch a high valuation for Albertsons, Reuters reported in September.
Albertsons is selling 65.3 million shares in the IPO and expects to raise up to $1.7 billion, it said in a regulatory filing on Friday.
Cerberus bought Safeway and combined it with Albertsons, creating a company with more than 2,200 stores, including 1,247 Safeway stores. The deal closed in January this year.
The IPO comes at a time when big grocery chains are getting squeezed by mass retailers such as Wal-Mart Stores Inc as well as upscale chains such as Whole Foods Market.
Cerberus is looking to capitalize on the strong performance of Albertsons larger rival Kroger Co, Reuters reported. In marketing IPOs, companies often use peers as reference for pricing.
Albertsons pro forma loss increased to $358 million in the 12 months ended June 30 from $330 million a year earlier. Its revenue inched up to $57.9 billion from $57.5 billion.
Kroger’s attributable profit rose to $1.05 billion in the six months ended Aug. 15 from $848 million a year earlier. Revenue rose to $58.59 billion from $58.27 billion.
As Albertsons markets itself to investors, it will tout still unrealized synergies from the Safeway merger and potential acquisition opportunities, Reuters had reported.
West Coast grocery chain Haggen, which filed for bankruptcy last month, has sued Albertsons, accusing it of misrepresenting the financial health of stores it sold to Haggen and competing unfairly against it.
Albertsons is headed by Robert Miller, who has previously been in charge of retailers Fred Meyer Inc and Rite Aid Corp, in addition to serving as vice chairman of Kroger.
Albertsons lists Cerberus, Kimco Realty, Klaff Realty and Lubert-Adler as its equity sponsors.
Citigroup, Morgan Stanley, Goldman Sachs, Merrill Lynch and Pierce, Fenner & Smith are the IPO’s underwriters. The company will list on the New York Stock Exchange under the symbol “ABS.”