Boise, Idaho-based Albertsons Cos., which completed its purchase of Safeway for $9 billion in January, said in a regulatory filing Friday that it plans to go public in an offering that could raise as much as $1.84 billion.

The company’s owner, private equity firm Cerberus Capital Management, plans to use IPO proceeds to reduce the grocer’s substantial debt, including repayment of an $850 million loan, Bloomberg News reported.

In the year that ended in February, Albertsons lost $1.2 billion on sales of $27.2 billion, the Wall Street Journal reported. Those results include large interest payments on buyout-related debt.

Former Safeway Chairman Gary Rogers said the decision last year to sell Pleasanton-based Safeway to Cerberus took all of 10 minutes. It was a quick decision because selling the company was in the best interest of Safeway shareholders, given the highly competitive nature of the grocery business, Rogers said then. Given the major retailers harboring ambitions of building grocery empires, it might be easier to list those who have no interest in the business.

“Everybody wants to be in the grocery business: Walmart, Costco, Target and Whole Foods,” Rogers said earlier this year at the Oakland offices of the Rogers Family Foundation. “It’s an easy business to enter. It’s a huge business and you can pick it off by focusing on a small demographic.

“For a company the size of Safeway — the second-largest conventional grocer after Kroger — you’re constantly fighting to hold on to market share,” Rogers said. “In a way, it drove the Safeway sale.”

Joining the stampede into groceries is retail’s 800-pound gorilla: Amazon.com, with a grocery delivery service.

“Jeff Bezos has big aspirations. It’s tough to compete against him,” Rogers said. “He’ll discount like crazy. He’s building an empire.”

In recently discussing prospects of Safeway’s parent going public, Rogers said, “Safeway is a good, solid earnings machine. With $1 billion in free cash flow, what’s not to like?”

Source: San Francisco Business Times