Milwaukee located Roundy’s supermarket chain filed a statement with the Securities and Exchange Commission on Monday for a potential float as an IPO. The parent of “Rainbow Foods” is looking to raise over $200 million with the offering of shares.
Willis Stein & Partners, located in Chicago, has owned Roundy’s since 2002 and from their 158 stores scattered around the Midwest they generate $4 billion in revenue. They have recently moved into Chicago with a few stores, and now the company employs a 17,700 strong workforce.
What brings Willis Stein & Partners to this offering? Well possibly the unsuccessful attempt to sell the company in 2007. Tougher competition from the larger chains such as Wal-Mart, plus a general trend for less spending probably made the company unattractive to buyers at that time.
Roundy’s had huge market share in the Milwaukee area around a decade ago, but since those days the company has only been able to hold onto around 12% of the market. Commentators are stating that the company could be offering an IPO to try and stop further debt. Last year borrowing was increased to $876 million as they took a further $150 million in loan, with some reports stating it paid it as cash dividends to owners.
Raising $230 million from IPO would only represent a small portion of the company, for which it was being touted for sale at $2 billion a few years ago. The likelihood is they are looking to benefit from improving stock markets to inject some cash into the business.
Maybe the cash will come at the right time as markets improve and the company can once again increase its market share to compete. Certainly one to watch when it floats.Previous Post » Merck & Co, Boeing & McDonald’s remained under Pressure Despite Positive DJIA