Dive Brief:
- AdvancePierre Foods Holdings plans to raise $400 million in its IPO by offering 18.6 million shares at a stock price of $20 to $23.
- At this price, the Ohio-based producer of sandwiches, sandwich components, and other entrees and snacks could command a diluted market value of $1.7 billion.
- Net proceeds from the IPO will go toward repaying a portion of its first lien term loan.
Dive Insight:
AdvancePierre is positioned in several categories that meet today's convenience-based demands. Its sandwich portfolio comprised about 67.4% of the company's net sales in fiscal 2015. Its prepared entrees and snacks also meet consumers' need for fast meal preparation and consumption on the go.
In FY 2015, AdvancePierre reported $37.1 million in net income on $1.6 billion in revenue. Private equity group Oaktree Capital Group manages funds that own an 80% stake in AdvancePierre, but according to a report, that stake could fall to 57.2% after the IPO. Earlier this year, reports said AdvancePierre had sought out a buyer, but decided to go public instead.
Food and beverage industry IPOs have been mixed lately. Amplify Snack Brands had an underwhelming debut last August, but US Foods had the year's second-largest IPO in late May.
However, even disappointing food IPOs can lead to success down the line. In three years, WhiteWave Foods tripled its price after shares fell 1.5% on the company's first day of trading in 2012. And when markets are in turmoil, as they recently were with the Brexit announcement, investors often see food and beverage stocks as a safe haven for slow and steady growth.