Just like its popular Duncan Hines cake mixes, packaged foods company Pinnacle Foods Inc. was on the rise Thursday morning after raising $580 million in an initial public offering.
The company -- which owns an array of popular brands including Birds Eye, Aunt Jemima, Log Cabin, Mrs. Butterworth’s and Hungry-Man -- debuted on the New York Stock Exchange under the PF symbol.
Wednesday night, the Parsippany, N.J.-based business sold 29 million shares for $20 apiece -- on the top end of its suggested $18-to-$20 range. By late Thursday morning in New York, the stock was trading up 12.8%, or $2.55, to $22.55 a share.
The IPO, one of the largest of the year, pegs Pinnacle’s value at about $2.3 billion. Private equity firm Blackstone Group bought the company, which pulled in $2.5 billion in net sales in its 2012 fiscal year, in 2007.
Blackstone spent $2.2 billion to take Pinnacle from a group of investors, including buyout baron C. Dean Metropoulos, who currently owns beer favorite Pabst Brewing Co. This month, Metropoulos agreed to pair up with Apollo Global Management to take control of Twinkies and other snacks from bankrupt Hostess Brands Inc. for $410 million.
Pinnacle, under Blackstone’s direction, acquired Birds Eye Foods Inc. for $1.3 billion in 2009.
In the U.S., about 85% of households buy Pinnacle products, according to the company’s S-1 filing with the Securities and Exchange Commission. Wal-Mart and its affiliates are Pinnacle’s largest customers, representing a quarter of net sales for the last three fiscal years.
The retail grocery industry continues to consolidate, making business risky for Pinnacle, the company said in its filing. Larger and more sophisticated buyers mean more demands on Pinnacle for lower prices and better promotions, a tricky proposition in a time of high ingredient costs.
As a public company, Pinnacle plans to offer an 18-cent quarterly dividend, a 3.6% yield based on its IPO price, according to research group PrivCo. That’s higher than the current 2.2% average yield for S&P 500 stocks, according to the group.