Foil and trash bags maker Reynolds raises US$1.2b in stock sale

Business | 31 Jan 2020 12:32 pm

Reynolds Consumer Products, the maker of Reynolds Wrap aluminum foil and Hefty trash bags, raised US$1.23 billion in an initial public offering, pricing its shares within the target range for the biggest ever listing by a household goods maker, Bloomberg reports.

The company sold 47.17 million shares Thursday for US$26 each after marketing them for US$25 to US$28, according to a statement.

Reynolds, backed by New Zealand billionaire Graeme Hart’s Rank Group, is valued in the IPO at about US$5.2 billion based on the outstanding shares listed in its filings.

The offering is the first billion-dollar U.S. listing of the year, as well as an unusual debut for a household goods maker. The listing is the largest ever by a company in that niche, topping the 2014 Brussels listing by soap maker Ontex Group NV’s 2014 that raised 596 million euros including the so-called greenshoe shares, according to data compiled by Bloomberg.

Reynolds pricing within its target range could signal an IPO rebound, after last year’s tech-related listings surge led by Uber Technologies Inc.’s US$8.1 billion offering gave way to a largely disappointing second half. Peloton, WeWork In November, Canadian waste management firm GFL Environmental Inc. canceled an IPO that targeted US$2.1 billion.

That followed Peloton Interactive Inc.’s below-water trading debut and the spectacular flop of WeWork’s share-sale plans, which were officially withdrawn in late September.

Next week, drug and biotech research services provider PPD Inc. is seeking to raise U$1.62 billion in its IPO. Casper Sleep Inc., one of the leading brands in the so-called bed-in-a-box industry, also plans to go public, with a goal of raising US$159 million.

Reynolds, based in Lake Forest, Illinois, was formed by Rank Group in 2010, primarily through a consolidation of the earlier Reynolds and Hefty businesses with Presto brands. Unlike many of the so-called unicorns that went public last year, Reynolds is profitable.

For the nine months ended September 30, it had net income of US$135 million on revenue of US$2.1 billion, according to its filings. The company’s products are used in 95 percent of U.S. households, according to its filings.

Hefty trash bags and related wares accounted for about 39 percent of its sales in 2018, followed closely by cookware goods including Reynolds foil, which was first sold in 1947 and has 64 percent of the U.S. market share.

Hefty tableware, including disposable cups and cutlery, made up the remaining 24 percent of revenue.

Efficiency, Innovation Reynolds said it plans to grow through improved operational efficiency and through innovation, generating 20 percent of its revenue each year from products introduced within the previous three years.

The company is also focusing on goods made with recycled, renewable, recyclable and compostable materials, according to its filings.

After the listing, Reynolds will be controlled by PFL, a subsidiary of a company wholly owned by Hart, according to the company’s filings. PFL will have 77 percent of the voting rights of Reynolds, which plans to use some of the IPO proceeds to repay debt and for general corporate purposes.

The offering was led by Credit Suisse Group AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. The shares are expected to begin trading Friday on the Nasdaq Global Select Market under the symbol REYN.

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