Investors Give Thumbs Down To Roundy’s Inc (NYSE:RNDY)’s Pricing Of Public Offering
The Milwaukee headquartered retail grocery chain, Roundy’s Inc (NYSE:RNDY) declared the pricing of its previously announced public offering on 7th February. It has proposed to sell 8.84 million shares of stock at $7 per share. This translated to a discount of over 19 percent on its February 3 start price of $8.67. This resulted in the stock shedding close to 15.68 percent of its market valuation last week, and close to 2.5 percent of its value during trading on 7th February.
The 7th February press note by the $321 million market capped Roundy’s Inc (NYSE:RNDY) disclosed that while the firm is putting up for sale, 2.95 million shares of common stock, an additional 5.89 million shares are being contributed by current share holders, who want the company to sell the shares as part of the public offering. The underwriters have been offered a 30 day option to buy out an additional 1.33 million shares, in the event of over subscription.
The offer will close on 12th February. The proceeds raised by the sale of shares via the public offer is expected to be sued for augmenting and upgrading the recently bought out Safeway stores in Chicago. This proceeds the company would be laying claim to would be limited to the revenue originating from the 2.95 million shares only. Roundy’s Inc (NYSE:RNDY) has retained the services of “Credit Suisse and J.P. Morgan, along with BofA Merrill Lynch and BMO Capital Markets” as its joint book running managers and has designated the Milwaukee-based brokerage firm Robert W. Baird & Co. Inc. as its lead manager for the offering.
Share Holders Booking Profits
The pricing of the public offering at a substantive discount over the current trading price of the stock resulted in the current share holders dumping the stock and book profits. They might consider entering into the stock at lower pricing during the public offering.