Jenny Craig Diet Clinics Take Stock to the Public
Jenny Craig Inc., the Del Mar-based chain of weight-loss clinics, plans an initial public stock offering that could raise up to $73.5 million for the company while making Jenny and Sid Craig, the company’s husband-and-wife founders, among the richest of Americans.
The company said it will sell 3.5-million newly issued common shares at a price of between $19 and $21 per share, according to a registration statement filed Thursday with the Securities and Exchange Commission. The company would use its proceeds to pay off its senior and subordinated debt.
The offering also would involve the sale of 1.5-million existing shares by Jenny Craig Inc. insiders, of which about 1.125-million shares would be sold by the Craigs. At $21 a share, the offering would gross the Craigs up to $24.6 million and value their remaining 61.5% stake in the company at $355 million.
In the United States, the company owns 332 Jenny Craig Weight Loss Centers and franchises 189 locations. About 100 additional centers are operated as franchises in Canada, Australia, Mexico, Puerto Rico and New Zealand.
The company at one time franchised at least 33 weight loss centers in the United Kingdom, but the locations closed down last year after the franchisee experienced financial problems. The couple reportedly attempted to acquire the San Diego Padres major league baseball franchise, but were outbid last year by a group headed by television producer Tom Werner.
Those two bumps in the corporate road notwithstanding, the company has grown quickly and profitably since its founding in 1983. Jenny Craig is believed to be third in number of weight loss centers, behind only Nutri/System and Diet Center chains, each of which has more than 1,000 locations.
For the fiscal year ended June 30, Jenny Craig reported a profit of $39 million on revenue of $412 million, contrasted with a profit of $38 million on revenue of $354 million in fiscal 1990.
Underwriting the stock offering are Bear, Stearns & Co. and Morgan Stanley & Co. The company has applied to have its shares listed on the New York Stock Exchange.
Of the 1.5-million shares to be sold by existing Jenny Craig shareholders, about 1.125 million shares are to be sold by the Craigs. After the offering is completed, the Craigs would still own 16.9-million shares, or 61.5% of the total outstanding. Sid Craig is the company’s chairman, and Jenny Craig is vice chairwoman.
The Jenny Craig weight loss method involves a combination of closely monitored nutrition and exercise. Jenny Craig sells its own line of low-calorie prepared foods.
