Fairway shares climb in market debut - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
Subscriber Content Preview | Request a free trialSearch  
  Go

Consumer & Retail

Print  |  Share  |  Reprint

Fairway shares climb in market debut

by Richard Collings and Taina Rosa  |  Published April 18, 2013 at 10:17 AM
Investors didn't get quite the bargain buying stock in Fairway Group Holdings Corp.'s initial public offering on Wednesday that the supermarket chain's customers typically shop for.

Fairway, known for its slogan "Like no other market," began trading on Wednesday after pricing its IPO at $13 a share Tuesday night, above the $10 to $12 range it issued last week. The grocery retailer experienced a 33% pop during the day, closing at $17.35 a share, giving it a market cap of more than $700 million, based on the roughly 41.2 million shares of common stock it had outstanding following the offering.

By putting up for sale 13.65 million shares of Class A common stock at $13 a share, Fairway raised approximately $177 million, or nearly $159 million in net proceeds after deducting underwriters' discount and commissions, as well as offering expenses.

Private equity backer Sterling Investment Partners LP will retain 52% of Fairway's common stock, according to the final prospectus of the offering. At the $13 per share IPO price, this stake is worth $279.1 million, or about 5.6 times the firm's original equity investment of about $50 million.

Sterling acquired a majority stake in Fairway in January 2007, valuing the retailer at about $137 million, sources told The Daily Deal at the time.

Fairway will use net proceeds from the IPO toward building new stores and for general corporate expenses, the company said. Fairway will first pay $76.8 million in accrued "unpaid preferred stock dividends, a management agreement termination fee and management bonuses."

Underwriters have a 30-day option to purchase up to roughly 2 million additional shares. Lead underwriters for the offering are Credit Suisse Securities (USA) LLC, Bank of America Merrill Lynch, Jefferies LLC and William Blair & Co. LLC.

The supermarket retailer has 12 locations in the New York metropolitan area, with additional stores planned for Manhattan's Chelsea neighborhood and for Nanuet, N.Y., both to open in 2013.

In fiscal 2012, the grocery store chain generated sales of about $555 million, up from roughly $401 million in 2010, while adjusted Ebitda increased to nearly $36 million, from approximately $24 million over the same period.

Jefferies investment bankers involved in the transaction are John Tibe, Mike Bauer and Adam Sokoloff.
Share:
Tags: Bank of America Merrill Lynch | Credit Suisse Securities | Fairway | IPO | Jefferies | NASDAQ | Sterling Investment Partners | William Blair

Meet the journalists

Richard Collings

Senior Writer: Consumer Products & Retail



Movers & Shakers

Launch Movers and shakers slideshow

Thomas Montag was named sole chief operating officer at Bank of America Merrill Lynch. For other updates launch today's Movers & shakers slideshow.

Video

Andy Levine of Jones Day discusses the future of Chinese M&A

Andy Levine, an M&A partner at Jones Day in New York, believes that increased buying activity by Chinese companies will be a key driver of global M&A over the next decade. The Chinese have been big buyers of natural resources in Australia, Africa and South America, and Shuanghui International Holdings' purchase of Smithfield Foods last year was a sign of China's increased interest in U.S. companies. The deal stirred some protectionist rumblings in the U.S., but CFIUS approved the transaction, and Levine believes that decision is a positive sign for the future of Chinese M&A activity in the U.S. More video

Sectors