Pinnacle Foods Inc., the maker of Birds Eye frozen foods, Duncan Hines frosting and Vlasic pickles, is expected to go public Thursday in the only major IPO this week.
The Parsippany, N.J.-based company could raise as much as $580 million in the initial public offering of its stock. It is on deck to sell 29 million shares at between $18 and $20 each. The pricing is expected late Wednesday.
"It's an instant blue-chip company," said John Fitzgibbon, founder of IPOScoop.com.
Fitzgibbon said the company has well-known and well-established brands that should help it grow, and that the food industry overall has done better than the broader market this year.
Pinnacle, which says its products can be found in 85 percent of all U.S. households, reported net sales of $2.48 billion in 2012 and net income of about $52.6 million. Between 2008 and 2012, the company reported sales growth of 59 percent. Pinnacle also plans to pay an 18-cent quarterly dividend.
Pinnacle could deal with its big debt load because of its size and growth prospects, Fitzgibbon said. Pinnacle expects proceeds of about $521 million from the IPO after paying expenses, which it plans to use to repay debt. Even after that, the company still carries about $2.1 billion in debt, stemming largely from its takeover by private equity firm Blackstone Group LP in 2007 and its $1.3 billion acquisition of Birds Eye in 2009.
Blackstone paid about $1.3 billion in cash for Pinnacle and assumed $900 million in debt. The investment firm is not selling shares in the IPO and will still own about 70 percent of Pinnacle after the deal is done.
Pinnacle joins organic food maker Annie's Inc., which went public at this time last year. Other food companies are leaving public markets, however. Shareholders of H.J. Heinz Co. will vote on April 30 whether to sell the ketchup maker to Warren Buffett's Berkshire Hathaway Inc. and investment firm 3G Capital for $23.3 billion.
Pinnacle plans to list on the New York Stock Exchange under the ticker "PF."
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