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Roundy's aims to go public

by David Carey | Published December 5, 2011 at 4:16 PM

After two fruitless efforts to auction off Roundy's Supermarkets Inc., the chain's private equity owner is mapping a new path to an exit.

The Milwaukee-based company said Monday, Dec. 5, that it aims to raise up to $230 million in an initial public offering of common shares. Existing shareholders, including majority owner Willis Stein & Partners, a Chicago PE firm, would sell part of their stakes.

Roundy's did not say how many shares would be sold or give a price. It said it would use its offering proceeds to pay down debt, which as of Oct. 1 totaled $876 million on Oct. 1.

Last spring Roundy's hired Moelis & Co. and Credit Suisse Group to find a buyer. That auction, like a similar effort in 2007, came up short.

Despite those failures, Willis Stein has more than recouped its equity outlay. Since buying Roundy's for $805 million in June 2002, the sponsor has raked off about $590 million -- nearly 1.9 times what it invested -- in dividends.

Roundy's operates 158 stores in Illinois, Minnesota and Wisconsin under four different banners -- Pick 'n Save, Coops Food Centers, Rainbow Foods and Mariano's Fresh Market.

When Willis Stein took it over, Roundy's had 39 stores in greater Milwaukee and more than a 40% local market share. It now operates 60 stores in greater Milwaukee with a 55% share, although its share outside Milwaukee is markedly lower, the IPO filing says.

Ebitda has been flat for three years. Roundy's posted $223.4 million of adjusted Ebitda on net sales of $3.8 billion in the 12 months ended Oct. 1.

As to the value Roundy's might command, the shares of one similar publicly traded rival, Grand Rapid, Mich.-based Spartan Stores Inc., sell for 5.2 times trailing Ebitda.

An IPO at that multiple would give Roundy's a $1.16 billion enterprise value.

But because Roundy's profit and Ebitda margins are higher than Spartan's, it could fetch more.

Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC head the IPO underwriting syndicate.

Kirkland & Ellis LLP's Dennis Myers is advising the company. Cravath, Swaine & Moore LLP's Craig Arcella represents the underwriters.

The company plans to change its name to Roundy's Inc. before the IPO.

It has not yet applied to list its shares on a particular exchange.

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Roundy's aims to go public

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