IPOs

Reynolds Consumer to Go Public in $1.2 Billion IPO

“Unlike other recent IPO candidates, Reynolds Consumer is profitable and has a decades-long history of making and selling everyday goods."
Matthew HellerJanuary 31, 2020

In the first $1 billion-plus initial public offering of the year, the manufacturer of Reynolds Wrap and Hefty bags is expected to make its market debut on Friday.

Reynolds Consumer Products, which claims to have a presence in 95% of U.S. households, priced its IPO at $26 per share, raising $1.2 billion. It had previously set a range of $25 to $28 per share.

The company sells products in the cooking, waste and storage, and tableware categories, with nearly two-thirds of its revenue for the year ending Dec. 31, 2018 coming from products that hold the top market share position for their category.

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According to the IPO prospectus, the cooking and baking segment is Reynolds’ largest, generating $1.2 billion in revenue out of a total of $3.1 billion in 2018 and growing at a compound annual rate of 4.7% from 2016 to 2018.

“Unlike other recent IPO candidates, Reynolds Consumer is profitable and has a decades-long history of making and selling everyday goods,” MarketWatch said, noting that Reynolds Wrap was launched in 1947.

Reynolds posted net income of $135 million on revenue of $2.20 billion over the nine months ended Sept. 30, compared with net income of $92 million on revenue of $2.24 billion in the same period a year ago.

Key competitors include Clorox and S.C. Johnson & Sons. “Our customers continuously evaluate their suppliers, often resulting in downward pricing pressure and increased pressure to continuously introduce and commercialize innovative new products, improve customer service, maintain strong relationships with our customers and, where applicable, develop and maintain brands that are meaningful to consumers,” the prospectus said.

“If our products fail to compete successfully with other branded or private label offerings, demand for our products and our sales and profitability could be negatively impacted,” it added.

New Zealand’s Packaging Finance Ltd. will remain Reynolds’ controlling shareholder once the IPO has closed, with PFL’s owner, billionaire Graeme Hart, having about 77% of the voting power. After Hart’s investment vehicle Rank Group acquired Alcoa’s packaging and consumer businesses in 2008 in a deal valued at $2.7 billion, that company became Reynolds Consumer Products.

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