Domino's IPO: Not As Tasty As It Smells

July 19, 2004 at 4:00 AM UTC

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Hungry for an IPO? With Google in the wings and first-day pops such as those lately at software makers Blackboard (BBBB ) (up 43%) and Salesforce.com (CRM ) (56%), it's only natural to feel greed's pang. Now, Wall Street wants you to save an appetite for the initial public offering coming soon from a familiar name: Domino's Pizza.

With nearly 7,500 outlets worldwide, Domino's, based in Ann Arbor, Mich., is so well-known that it has many earmarks of a can't-miss proposition. In a $385 million deal led by J.P. Morgan Chase (JPM ) and Citigroup (C ), the No. 1 pizza deliverer is set to sell 37% of its equity to the public at an estimated $16 a share. Current owners, mostly funds run by Bain Capital, plan to keep $219 million of the net proceeds. Domino's aims to use most of the $137 million it nets to pay off some debt. The fresh cash can only aid Domino's in its war with Papa John's International (PZZA ) and Yum! Brands' (YUM ) Pizza Hut chain. Less certain is whether Domino's can satisfy investors' hunger for a hot stock.