Annie’s Inc. (BNNY), the maker of organic and natural foods such as bunny-shaped crackers, surged 89 percent in its trading debut after raising $95 million in an initial public offering that priced the shares above the range.
The shares climbed to $35.92 at the close in New York. Annie’s and its investors sold 5 million shares for $19 each in the IPO, the company said in a statement. Annie’s earlier offered them for $16 to $18 apiece.
The IPO price valued Annie’s at $316.3 million, or about 2.3 times sales in the 12 months through Dec. 31. That compared with an average of 1.6 for a basket of competitors that Annie’s lists in its filing, including Kraft Foods Inc. (KFT) and Kellogg Co. (K), according to data compiled by Bloomberg. Annie’s, whose products include macaroni-and-cheese and rabbit-shaped cheddar crackers, also competes with private organic and natural-food companies Nature’s Path Foods Inc. and Amy’s Kitchen Inc.
While Annie’s may have priced the shares too low, it was difficult to expect the price jumping as much as it did during the first day of trading, said Ken Harris, chief executive officer of Kantar Retail Americas Consulting. The gain positions Annie’s for a secondary offering, Harris said.
“I don’t think you could have anticipated it,” Harris said in a phone interview. “They have a real knack for making healthy, good-tasting products. They will probably have a second round fairly quickly.”
CEO John Foraker said Annie’s is focusing on growing by positioning its organic foods in the center of grocery stores, alongside mainstream products. He declined to comment on the possibility of a secondary stock offering.
“We see growth from getting into the main aisles of the stores,” he said in a telephone interview. “We think natural and organic is mainstream.”
Annie’s, based in Berkeley, California, follows more than 30 companies to go public in the U.S. this year, data compiled by Bloomberg show. Yelp Inc. (YELP) has almost doubled since its IPO this month, while Caesars Entertainment Corp. (CZR) had risen 44 percent through yesterday since going public in February.
Co-founded in 1989 by Annie Withey and Andrew Martin, Annie’s plans to use some of the proceeds from the sale to repay debt. Withey, whose rabbit Bernie inspired the company’s bunny mascot, still writes the personal letters printed on the product boxes and “remains the inspiration and corporate conscience” for the company’s products, according to the website.
Annie’s had already raised the price range on the IPO, led by Credit Suisse Group AG (CSGN) and JPMorgan Chase & Co. (JPM), once this week, from a range of $14 to $16. The stock is listed on the New York Stock Exchange under the symbol BNNY.
Revenue in the nine months ended Dec. 31 surged 21 percent to $98.3 million from a year earlier, according to a regulatory filing. Under Foraker, Annie’s posted a profit of $6 million for the year ended March 31, 2010, after three years of losses. For the year ended March 31, 2011, net income more than tripled to $20.2 million.
Private-equity firm Solera Capital LLC planned to reduce its stake to about 63 percent from 91 percent, according to earlier terms of the IPO prospectus. Annie’s planned to sell 950,000 shares in the offering, while existing shareholders planned to sell 4.05 million.
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