Del Monte Raises $300 Million in IPO

Canned-foods giant Del Monte Foods Co. and existing shareholders on Thursday raised $300 million in an initial stock sale.

The San Francisco-based company sold 16.7 million shares at $15 each, the midpoint of the $14 to $16 expected range set by lead underwriter Morgan Stanley Dean Witter & Co. The company raised a total of about $250.5 million. Existing shareholders sold an additional 3.3 million shares at the same price, raising $49.5 million.

While Del Monte’s products are a staple on grocery store shelves, its business is slow-growing with plenty of competition. New managers who took control of the company in 1997 have pushed for faster growth with specialty products such as fruit cups in individual servings. In late 1997, they bought Contadina, a maker of tomato products, pushing Del Monte ahead of ConAgra’s Hunt’s brand.

Excluding the acquisition of Contadina, sales were $1.31 billion for the fiscal year ended June 30, 1998; $1.22 billion for 1997, and $1.31 billion again in 1996.

These sales produced an operating profit the last two years, though the company’s interest expense--$77 million in fiscal 1998 and $52 million in 1997--limited its profit to $5 million in 1998 and caused a $58-million loss the previous year.

Texas Pacific Group, an investment firm led by financier David Bonderman, acquired a controlling interest in Del Monte in April 1997, and will continue to hold a 47% stake. Bonderman is known for hiring industry specialists to revive companies that may not be performing up to their potential.

Del Monte will trade under the symbol DLM on the New York Stock Exchange.

At a Glance

In other initial stock offering news:

* In what could rank as one of the 10 largest IPOs ever made in the U.S., Delphi Automotive Systems Corp. priced its initial public offer of 100 million shares at $17 each, in line with expectations, lead underwriter Morgan Stanley Dean Witter said.

Shares of the $28.5-billion Tory, Mich.-based auto parts company, a spinoff from General Motors Corp., were priced within the expected range of $15 to $18 per share. Assuming a price of $17 per share when trading opens today, the offering could raise about $1.7 billion, ranking it as one of the largest U.S. IPOs of all time.

The 100 million shares of Delphi, which will trade on the NYSE under the symbol DPH, represent about 17.3% of the company’s outstanding shares.

* Healtheon Corp. disclosed the financial details for its upcoming initial public offering, stating that the Santa Clara company will sell 5 million common shares at $6 to $7 each.

Formed by Netscape Communications Corp.’s Chairman James H. Clark to process health-care transactions through the Internet, Healtheon filed last month with the Securities and Exchange Commission to raise an estimated $35 million through the IPO. However, the company waited until Thursday to disclose the number of shares to be sold and their expected price.

At $7 a share, the IPO would give Healtheon an initial market value of $416 million. The company will have 59.42 million shares outstanding after the stock sale, according to an amended registration statement filed with the SEC.

* Ravenswood Winery Inc., a Sonoma-based wine producer, filed to sell a 22% stake to new investors through an initial stock offering to expand its production of premium wines.

Ravenswood filed with the Securities and Exchange Commission to sell 1 million shares for $10.50 to $13.50 each. If shares sell for a median $12 each, Ravenswood would have an implied market value of $54.6 million, based on 4.55 million shares to be outstanding after the sale.

Ravenswood specializes in Zinfandel and other red wines. The premium-price wine maker had 1998 sales of $17 million, almost a threefold increase from its 1994 sales of $6.3 million. About two-thirds of 1998 sales came from its Zinfandel.

Beringer Wine Estates Holdings Inc. and Golden State Vintners Inc. are among the California wine companies that have gone public in the last 18 months.

* Corinthian Colleges Inc., one of the largest operators of for-profit post-secondary schools in the U.S., raised $48.6 million in an initial stock sale.

The Santa Ana-based owner of vocational schools sold 2.7 million shares at $18 each, the top of the $16-to-$18 price range set by Salomon Smith Barney Inc.

The sale gave Corinthian Colleges a market value of about $186.2 million, based on 10.3 million shares outstanding.