Pie firm beefs up with IPO

Patties Foods, Australia's biggest pie-maker, plans to sell A$102.7 million ($115.4 million) of stock in an initial public offering to fund acquisitions and expansion into overseas markets.

The company, which makes Four'N Twenty and Nanna's pies, began exporting meat pies to the United States last month as it targets new sources of revenue to reduce its dependence on Australia, where it gets 99 per cent of sales.

Patties will sell 58.7 million shares at A$1.75 each, Patties said yesterday.

At the IPO price, Patties will have a market value of A$243 million and the founding Rijs family will retain a 48 per cent stake.

The offer is priced at 14.5 times the forecast net income for next year of A$16.8 million. Patties expects sales next year of A$131.5 million and a dividend of 7.2c.

The company has 51 per cent of Australia's frozen savoury pastry market and 18 per cent of frozen dessert sales.

Australia's total savoury pastry market, which includes the sale of hot pies and sausage rolls at sporting events and convenience stores, is worth A$1.5 billion a year, the company said.

The Rijs family founded Patties 40 years ago with a single cake shop.

After expanding its namesake brand, the company acquired the Four'N Twenty, Herbert Adams and Wedgwood labels in 2003 from US company JR Simplot Co.

- BLOOMBERG