Roundy's Supermarkets Inc., the Milwaukee-based parent of Rainbow Foods and other grocery chains, said Monday that it hopes to raise $230 million through an initial public offering.
The company, which has been owned by private equity investors since 2002, has been the subject of repeated rumors that it was up for sale.
In a filing with securities regulators, Roundy's said the investor group led by Willis Stein of Chicago would continue to hold a controlling stake in the company after the IPO. The proceeds would be used to restructure debt, the filing said.
Roundy's employs 17,700 people and had sales of $3.7 billion in 2010. Most of its operations are in Wisconsin, though it owns 32 Rainbow stores in the Twin Cities and recently expanded into the Chicago area.
"They have been trying to sell the company and haven't had any luck," said John Dean, a Twin Cities grocery consultant.
Stein's group purchased the company for $750 million, and has expanded the chain from 60 to 158 stores, operating under the names Pick 'n Save and Metro Market in the Milwaukee area and Copps in Madison and northern Wisconsin.
Roundy's acquired the Rainbow stores in 2003, a year after the private equity group bought Roundy's. In its most recent expansion, it has opened four stores since July 2010 in the Chicago area under a new banner, Mariano's Fresh Market.
Supermarkets over the past decade have faced tougher competition from low-price supercenters at Wal-Mart and Target. That has caused net sales and market shares to slip.
Rainbow, once the No. 2 Twin Cities supermarket chain, now has 12 percent of the market and is ranked third behind Cub and Target stores.
"When they bought the company, they intended to be able to turn it," Dean said of the private equity group. "I am not sure it is worth more today."
According to financial statements filed with the IPO notice, Roundy's had net earnings of $46.1 million in 2010, down 2 percent from 2009.
Roundy's last year increased the company's overall debt by borrowing $150 million and paying that amount in cash dividends to its owners, according to the IPO filing. The company's common stock paid no dividends during fiscal 2008, 2009 or 2011, the filing said.
In connection with the IPO, Roundy's said it anticipates entering into a new senior credit facility, though the amount wasn't specified. The current debt is $876 million, the filing said.
The company was founded in 1872 as a privately owned food wholesaling company, and in 1952 began operating as Roundy's after some of its customers purchased it, becoming a retailer-owned cooperative. Its first Pick 'n Save store opened in 1975. In recent years, it has exited the business of wholesaling to other grocery stores.
The latest sale rumors surfaced in March. The Deal Pipeline, a New York-based information service, cited unnamed sources that said Roundy's had retained investment advisers Credit Suisse Group and Moelis & Co. to auction off the grocery company. The IPO filing listed Moelis as financial adviser. Credit Suisse and J.P. Morgan Chase are lead underwriters.
David Shaffer •673-7090
