Food products major RHM plans £975 million float on London bourse |
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Thu, 07 Jul 2005 04:05
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LONDON: Food products company RHM is returning to the London Stock Exchange 13 years after its delisting, intending to capitalise on the increasing popularity of its Hovis bread and Mr Kipling cakes. The company is coming out with a 975 million-pound IPO offering 230.6 million shares. Post-IPO, the company's current owner, private equity group Doughty Hanson, will retain around 33 per cent holding.
The group had bought RHM from Tomkins Plc in 2000 for 1.1 billion pounds, including debt. It had withdrawn an earlier floatation attempt in 2002.
In a statement, the company said the funds generated will be used for its pension fund and to repay debt. The company's chairman Jan Du Plessis said, "The fact that we have been able to underwrite more than 1.3 billion pounds in equity and debt highlights the market's confidence in RHM and in its prospects for sustained future growth."
The listing will take place on 19 July. RHM said the shares will be offered in the range of 228 pence to 285 pence each. Investment bank Credit Suisse First Boston has underwritten the offer at 228 pence, which will guarantee an offer size of at least 561 million pounds. It had earlier valued itself at between 1 and 1.3 billion pounds.
Recently, Credit Suisse, along with Royal Bank of Scotland, had jointly underwritten a 750 million pound bank loan and 150 million pound working capital facility for the company in place of its present facilities and securitised bonds. For the year ended April 30, the company recorded a net income of 175.8 million pounds on sales of 1.53 billion pounds.
RHM, in short for Ranks Hovis McDougall, has 12 brands which are its flagship products and derives nearly three-quarters of its sales from them. Its Bisto gravy and Robertsons jams are found in 98 per cent of U.K. households, according to the company.
Apart from the branded products, the company also makes flour, grocery items and prepared meals and is also a major supplier for grocery outlets like Tesco, Wal-Mart's Asda and J. Sainsbury. It has some 16,000 people on its rolls.
Credit Suisse is the sole book runner and coordinator for the offer along with JPMorgan Cazenove, Deutsche Bank, HSBC and Citigroup as co-lead managers.
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