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Dividend key to Cerberus' Albertsons return

Illustration of pile of money in the Arctic

Illustration: Rebecca Zisser/Axios

Cerberus will generate an initial rate of return in Albertsons of more than 200% if the $4 billion dividend and the deal with Kroger are completed as planned, a source familiar with the situation said.

Why it's the BFD: At a time when the traditional LBO has come under scrutiny, Albertsons could be a win, but they can't spend that money yet.

Catch up quick: That payout is currently being opposed by several states' attorneys general.

Details: Cerberus' investment began in 2006 when the firm acquired struggling Albertsons stores for $350 million, as Bloomberg reports.

  • A number of Cerberus funds on both the debt and equity side have been involved in the Albertsons investment in some form or fashion, the source says, along with outside co-investors.
  • Cerberus' current fund investment dates back to 2015, essentially, when Albertsons brought in new funds as part of the acquisition of Safeway.
  • Cerberus was finally able to take that company public in 2020.
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