Smart & Final Stores, a warehouse-style grocery chain LBO'd by Ares with 250 locations in the Western US, announced terms for its IPO on Thursday. The Commerce, CA-based company plans to raise $175 million by offering 13.5 million shares at a price range of $12 to $14. At the midpoint of the proposed range, Smart & Final Stores would command a fully diluted market value of $1.0 billion.
For the twenty-four weeks ended June 15, 2014, revenue grew 8% to $1.6 billion, driven by 5% comp growth (up 40 bps) as well as the addition of nine new stores. Gross margin rose by 10 bps to 14.9% and adjusted EBITDA grew 9% to $78 million (5% margin). After using IPO proceeds to pay down debt, Smart & Final will have total debt of $589 million (3.4x adjusted EBITDA).
The company operates 250 non-membership warehouse-style stores in the Western United States under the Smart & Final and Cash & Carry brand names and has an additional 13 stores in Northwestern Mexico under a joint venture. Its stores offer 9,500-14,500 SKUs and have achieved positive comp sales growth in 24 of the last 25 quarters. May IPO Ares Management (ARES) bought the company for $975 million in the 4Q12. Since its original filing, another LBO'd grocer has filed for an IPO - Southeastern Grocers (SEG).
Smart & Final Stores, which was founded in 1871 and booked $3.3 billion in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol SFS. Credit Suisse, Morgan Stanley, Deutsche Bank, Barclays, Citi, Piper Jaffray and Guggenheim Securities are the joint bookrunners on the deal. It is expected to price during the week of September 22, 2014.
