Pinnacle Foods Inc. (PF) has announced that some of its stockholders intend to make an underwritten secondary offering of 15 million shares. These shareholders are primarily affiliates of The Blackstone Group L.P. (BX). It should be noted that since no shares are being sold by the company, the proceeds will go to the shareholders who make the offering. Pinnacle expects the offering to close on Sep 12, 2014, subject to customary closing conditions.
Credit Suisse Group AG (CS) and Morgan Stanley (MS) are acting as bookrunners for the offering. These bookrunners will also have an option to purchase up to an additional 2.25 million shares from the shareholders.
Last month, this food company reported in-line earnings and lower-than-expected sales in the second quarter of 2014. However, earnings of 33 cents increased 22% on the back of higher year-over-year sales. Sales of $618 million increased approximately 9% versus the year-ago period in the second quarter, primarily due to higher volume and mix and the benefit of the Wish-Bone acquisition, which more than offset the price declines and currency headwinds.
In Oct 2013, Pinnacle Foods completed the acquisition of the Wish-Bone salad dressing business. Wish-Bone contributed $38 million to net sales and 2 cents to adjusted earnings in 2013.
Pinnacle Foods has reaffirmed its earnings outlook and expects double-digit growth in adjusted earnings in 2014. Earnings are expected in the range of $1.70-$1.75 per share, marking an increase of 12% to 15% from 2013, based on Pinnacle’s strong productivity initiatives and a solid innovation pipeline of products. However, the company continues to expect inflation of approximately 2% in 2014.
Pinnacle Foods holds a Zacks Rank #2 (Buy).
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