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Albertsons aims for IPO re-do at lower price, considers downsize

Hours after its initial public offering was waylaid by negative earnings guidance from fellow retailer Wal-Mart Stores, among other things, the grocery chain Albertsons Companies made plans to reattempt its deal on Thursday, said someone familiar with the matter, in hopes of a more successful debut.

Albertsons, the Boise-based supermarket company owned by the private-equity firm Cerberus Capital Management and several other sponsors, had intended to raise as much as $1.95 billion in an initial public offering priced at between $23 and $26 per share, according to its deal filings.

But with the market reacting negatively to a surprise announcement from Wal-Mart that earnings were likely to be far lower than originally expected in the coming year, investor appetite for the Albertsons new issue was dismayingly soft, the person familiar with the matter said, prompting Wednesday's postponement.

ALBERTSONS EARNS
Matthew Staver | Bloomberg | Getty Images

In a voice mail message, an Albertsons spokesman confirmed the IPO delay on Wednesday, but didn't provide further details. A spokesman for Cerberus could not be reached.

While the Wal-Mart forecast on Wednesday cast a chill through the broad U.S. stock market and the retail sector particularly, it came as the Albertsons deal was already hitting some resistance, said people familiar with the matter. Despite an intended price range in the mid-$20s, some of the larger institutional investors who were bidding for shares of the IPO had gravitated toward a $17 price point -- a level far lower than what the grocery chain's sponsors had in mind.

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As of Wednesday night, there was no guarantee of specific timing, but Albertsons did plan to "take a swing" at pricing its deal the following afternoon, said someone familiar with the matter.

If the Albertsons IPO were to be priced on Thursday evening, this person said, a share price of $18 might be the best underwriters could expect. One strategy the company's owners might use, the person added, was to downsize the deal from a planned 16 percent of the shares outstanding to something smaller.

And Albertsons wasn't the only new issue to face resistance on Wednesday. First Data, the payment processor, went forward with a planned IPO pricing late in the day, but at $16 per share -- a level notably beneath the $18 to $20 range the company had intended.