Ralphs Backs Off on Initial Public Offering

Ralphs Supermarkets Inc., the grocery store chain controlled by billionaire Edward J. DeBartolo, Tuesday canceled an initial public offering of about 6 million shares, citing a weak market for new stock issues.

The Compton-based supermarket giant had planned to make the offering, which would have constituted a stake of about 20% of the company, this week. Ralphs had hoped to sell the stock in the $15- to $17-per-share range. The company canceled the plans, which were developed last February, after concluding that investors would not pay those prices under current market conditions.

“The current equity market is a dramatically different market than when we began this process,” Ralphs Chairman Byron Allumbaugh said. “For this reason, we chose not to sell equity of Ralphs at prices that do not reflect the true value and high quality of the company.”

Wall Street has recently been flooded with new stock issues, which has dampened demand. Industry analysts said Ralphs also canceled the offering partly because demand for food retailing stocks has been lackluster.

“Ralphs was hoping to get share prices comparable to other major firms in the industry,” said Sheila O’Connell, an analyst at Duff & Phelps in Chicago. “But share prices from companies like Kroger, Safeway and Vons have been weaker lately.”

The company had hoped to raise $70 million through a public offering to build new stores and remodel some existing outlets. It said it expects to meet the expansion and remodeling needs with bank financing.

The company, which has 156 stores in Southern California, said the remaining elements of its recapitalization plan--among them an offering of $300 million in subordinated notes--will be completed shortly.