Pinnacle Foods Sets IPO

Pinnacle Foods is a company that had $2.5 billion in sales last year but has $2.1 billion in total debt. The company just released its IPO today; 29 million shares at $20 apiece. Pinnacle Food’s debt has not had a major impact on their initial public offering because the expectation of low interest rates for the foreseeable future has caused investors to downgrade their concerns. A sizable dividend (18 cents quarterly) is another factor in the IPO because it will show if investors would be willing to pay for a company with debt and low projections for expansion.

Recent IPO’s have not been affected by leverage due to the low interest rates although the food selling industry has not seen many companies going public. Pinnacle Foods IPO is valued at $580 million and will be this year’s third largest offering. The company’s shares will begin to be traded on the market tomorrow.

Evan Chang

Source:

The Wall Street Journal

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