Apollo Makes Another Non-Control Deal

Apollo Global Management will purchase $1.75 billion of convertible preferred stock of Albertsons Companies, one of the largest food and drug retailers in the United States. Albertsons has been a portfolio company of New York City-based Cerberus Capital Management since 2006.

Albertsons is an operator of grocery and drug stores with more than 2,200 food and drug stores in 34 states including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street and Haggen. The company also operates more than 1,700 pharmacies and 400 fuel centers. Albertsons, with annual revenues of about $62 billion, is headquartered in Boise, Idaho.

The investment by Apollo represents approximately 17.5% pro forma equity ownership of Albertsons on an as-converted basis and was led by Apollo’s hybrid value business – which makes creative equity and debt investments – and Apollo’s credit platform.

“We believe the Albertsons investment showcases the benefits of Apollo’s integrated platform and our ability to leverage capital and knowledge across the firm,” said Apollo co-presidents Scott Kleinman and Jim Zelter in a released statement. “With expertise in the grocery sector, flexible strategies and an integrated operating model, our hybrid value and credit teams were able to jointly lead one of the largest private preferred investments made in recent years.”

“Apollo created its hybrid value business to provide capital solutions tailored to a company’s specific needs,” said Matt Michelini and Rob Ruberton, senior partners and co-heads of the hybrid value business in a released statement. “Businesses are finding these capabilities highly relevant in today’s volatile economic and market environment. We are pleased to have invested significant capital over the last month, working with strong management teams, boards, sponsors, founders and public companies, with the latest being Albertsons, one of the premier grocers in the US.”

The investment in Albertsons is the third investment made by Apollo’s hybrid value business in the past month and follows investments in Expedia Group and Cimpress. Expedia Group (NASDAQ: EXPE) is an online travel company with four business segments: Core Online Travel Agencies, Trivago (hotel and lodging), Vrbo (Vacation Rentals by Owner), and Egencia (business travel). Last year, Expedia had revenues of $12.1 billion and EBITDA of $1.9 billion. Cimpress (Nasdaq: CMPR), is an e-commerce provider of customized print, signage, merchandise, and other marketing products to small and medium-sized businesses.  For the last twelve months, Cimpress had revenues of $2.7 billion and EBITDA of $318 million.

Apollo’s (NYSE: APO) private equity funds have acquired more than 150 companies since its founding in 1990 and has more than $316 billion in assets under management. The firm is based in New York City.

Apollo’s investment in Albertsons is expected to close by June 15, 2020.

Private Equity Professional | May 27, 2020

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