Dole Joins Line of Disappointing IPOs (DOLE)

Dole Food Company, Inc. (NYSE: DOLE) is making its re-return this morning and is joining in a long line of a very disappointing IPO market.  Dole may be the largest producer and seller of fresh fruits and vegetables in the world, but it is also effectively being treated the same as private equity backed deals as this company has been public before.  The Initial Public Offering was for 35.7 million shares and the $12.50 pricing is under the indicated price range of $13 to $15 per share.

Investor David Murdock took Dole private in 2003, and he is still going to deeply entrenched here with a 59% stake after the IPO.  Goldman Sachs, Bank of America Merrill Lynch, and Deutsche Bank were listed as the lead managers and co-managers were listed as BB&T Capital Markets, JP Morgan, Morgan Stanley, HSBC Corporation, and Scotia Capital.

This raises about $446 million and investors seem to be concerned about the $1.9 billion debt load. All food companies have fairly low margins, so any new competition or any hiccups could become an issue for the company.  The good news is that Dole has sold off some non-core assets and paid down some of the debt load. The company’s debt is under investment grade, yet the company did say that proceeds from the offering today will be used to pay down debt.

Dole’s 2008 revenue was $7.6 billion and net income was listed as a rounded $123 million.  The company has not been immune to the recession, and some of the revenue decline might lead one into thinking it is a luxury.  Revenues were off by about 11% in the first half at roughly $3.3 billion, but its profit was down 18%.

To see how tough the IPO market is, here is a detail of just how many deals traded as busted deals as of Monday.

You can join our open email distribution list to get updates on top analyst upgrades and downgrades, top day trader alerts, IPO’s, secondary offerings, Warren Buffett and other guru activity, M&A and more.

JON C. OGG
OCTOBER 23, 2009