United States securities and exchange commission logo
December 23, 2022
Vivek Sankaran
Chief Executive Officer
Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, Idaho 83706
Re: Albertsons
Companies, Inc.
Preliminary
Information Statement on Schedule 14C
Filed December 2,
2022
File No. 001-39350
Dear Vivek Sankaran:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Preliminary Information Statement on Schedule 14C Filed December 2, 2022
Questions and Answers About the Merger, page 1
1. Please add a Question
and Answer that explains the current anti-trust issues that the
Company is facing with
respect to completing the Merger.
Q: What will I be entitled to receive pursuant to the Merger as a
stockholder of the Company?,
page 2
2. Elaborate upon the
answer to this question by providing an example of how the SpinCo
Consideration Amount
might reasonably be determined, along with indications of how the
amounts could change
depending upon how the facts could change.
Vivek Sankaran
FirstName
Albertsons LastNameVivek
Companies, Inc. Sankaran
Comapany23,
December NameAlbertsons
2022 Companies, Inc.
December
Page 2 23, 2022 Page 2
FirstName LastName
Q: I am not eligible to receive the Pre-Closing Dividend because I was not a
holder of record ...
?, page 4
3. In the answer to this question, please reiterate that the Merger
Consideration to be
received by stockholders who are holders of record subsequent to
October 24, 2022 will
be adjusted for the Pre-Closing Dividend and the SpinCo Consideration
Amount.
Q: When will the Company pay the Pre-Closing Dividend?, page 4
4. In the answer to this question, please revise to reflect all current
litigation and/or claims as
they relate to the timing of payment of the Pre-Closing Dividend.
Please discuss the
potential outcomes of such claims, including whether the Merger would
close if the Pre-
Closing Dividend was delayed or terminated and how that might affect
the consideration
to be paid to stockholders. Please update the Background to the Merger
as well.
Q. Is the payment of the Pre-Closing Dividend contingent on the Merger
closing?, page 5
5. Considering the lack of this contingency, explain to stockholders why
the Merger
Consideration will be adjusted to take it into account.
Q. When will I know more about SpinCo and the adjustment to the Merger
Consideration?, page
6
6. Elaborate upon the answer to this question to explain how you will
provide more
information, if not in this information statement.
Summary, page 8
7. Please include the "local banner names" for Kroger stores as you do
for Albertson's
stores.
Dividends, page 17
8. We note that you have a history of paying dividends, including your
most recent dividend
of $0.12 per share to stockholders of records as of the close of
business on October 31,
2022. We also note your pending Pre-Closing Dividend of $6.85 per
share. Please
explain the nature of the change in the amount of the dividends. We
also note your
statement that "[t]he Company is permitted under the Merger Agreement
to continue to
pay regular quarterly cash dividends on the Common Stock and to
holders of Preferred
Stock." Please disclose whether you currently have any intentions of
continuing to pay
regular quarterly cash dividends after paying the Pre-Closing Dividend
and before the
Merger closes.
Vivek Sankaran
FirstName
Albertsons LastNameVivek
Companies, Inc. Sankaran
Comapany23,
December NameAlbertsons
2022 Companies, Inc.
December
Page 3 23, 2022 Page 3
FirstName LastName
The Merger
Background to the Merger, page 19
9. Elaborate upon the concerns that Party A had raised with respect to
the transaction.
10. Please elaborate upon the material discussions and negotiations that
occurred at the
meetings that took place between May 5 and June 5, 2022, to describe
any material
developments regarding anti-trust issues and the various strategic
alternatives.
11. Please provide additional detail on how Kroger determined the terms
and valuation of its
preliminary non-binding indication of interest submitted on June 25,
2022, including the
per share price, the cap on number of stores to be divested, and the
time period for
divestitures and termination fees, as well as other terms and
conditions. Please also
describe in further detail the material discussions and negotiations
that occurred for each
subsequent meeting, with a focus on the discussions and negotiations
surrounding anti-
trust concerns and the divestment of stores, including the potential
alternatives for the
divestment of stores, which stores may be divested, and the structure
and timing of the
SpinCo.
12. Clarify whether the manner in which the Pre-Closing Dividend would be
calculated was
negotiated between the parties and, if so, revise to summarize the
nature of those
negotiations. In this regard, you mention in your negotiations with
Party A that you could
pay dividends equal to the aggregate reduction in the Company's net
debt between signing
and closing of the transaction; however, it's not clear after that
point how you arrived at
the final amount of the Pre-Closing Dividend, except that it appears
to have been limited
to an amount not to exceed $4 billion. Disclose when the Board
determined the Pre-
Closing Dividend to be advisable.
Recommendation of the Company's Board and Reasons for the Merger, page 35
13. In considering the risks and factors weighing against the Merger,
please tell us whether
the Board considered any risks associated with paying the Pre-Closing
Dividend. Please
also tell us if the Board plans to reconsider the transaction in the
event that such divided
might not be paid due to the temporary restraining order or otherwise.
If not, please tell us
why not.
14. In considering the risks and factors weighing against the Merger,
disclose whether the
Board considered that, as a controlled company, the transaction was
ultimately approved
by the Majority Common Stockholders, without giving all stockholders
the opportunity to
vote on the transaction.
Projected Financial Information on the Company, page 50
15. We note the following statements on pages 51 and 53:
"In light of the foregoing factors and the uncertainties
inherent in the Forecasts,
Vivek Sankaran
Albertsons Companies, Inc.
December 23, 2022
Page 4
stockholders are cautioned not to rely on the Forecasts included
in this information
statement."
"In light of the foregoing factors and the uncertainties
inherent in the SpinCo
Estimates, stockholders are cautioned not to rely on the SpinCo
Estimates included in
this information statement with respect to SpinCo. The actual
information may differ
materially from the information contained herein."
While it is acceptable to include qualifying language concerning
subjective analyses, it is
inappropriate to indicate that investors cannot rely on disclosure.
Please revise
accordingly.
16. Elaborate upon the assumptions and estimates as to future events that
were made by
management, including the various factors listed here such as timing
of business
investments, capital expenditures, changes in actual or projected cash
flows, etc.
Estimated Financial Information of SpinCo
Four-Wall EBITDA, page 52
17. We note that in the SpinCo Estimates, the Four-Wall EBITDA and Real
Estate Value was
provided for 100 Stores and for 375 stores, with 375 stores treated as
the high-end of the
number of stores to be contributed to SpinCo pursuant to the Merger
Agreement.
However, we note that the divestiture cap is 650 stores. In the
Background to the Merger
section, please disclose how you determined the high-end number and
the divestiture cap,
and explain why these are not the same numbers. Additionally, in the
event that there are
more than 375 stores contributed to SpinCo, please explain how that
will affect
the Board's determination to continue to recommend the transaction.
Potential Range of SpinCo Consideration, page 75
18. Clarify how you arrived at the various scenarios you discuss here by
explaining the
number of stores, at a minimum, these amounts assume.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Please contact Cara Wirth at (202) 551-7127 or Mara Ransom at (202)
551-3264 with
any questions.
FirstName LastNameVivek Sankaran Sincerely,
Comapany NameAlbertsons Companies, Inc.
December 23, 2022 Page 4 Division of
Corporation Finance
FirstName LastName Office of Trade
& Services