Business

A dill-y ipo at pinnacle

Stephen Schwarzman is hoping the rising stock market gets his buyout firm out of a pickle.

Schwarzman’s Blackstone-backed Pinnacle Foods — the Parsippany, NJ, owner of Vlasic Pickles and other food brands — yesterday launched an initial public offering that could raise as much as $670 million.

The company plans to sell 29 million shares at between $18 and $20 apiece. The IPO will price Wednesday.

At the midpoint, the company would be worth $2.2 billion, while Blackstone’s equity stake would be valued at $1.5 billion — nearly double its $744 million investment. The buyout firm will not be selling any shares in the IPO.

Blackstone bought Pinnacle in a $2.2 billion 2007 leveraged buyout from Dean Metropoulos, the same food executive who teamed with private-equity firm Apollo Global Management to buy Hostess’ snack cake brands.

“I don’t think the performance has been that great,” said one investment banker, referring to the Pinnacle deal.

Blackstone’s plan called for Pinnacle to make more acquisitions to add to its stable of food brands, allowing it to cut costs and boost profits.

But sources say the strategy was hampered from the start by heavy debt and a lack of opportunities. Pinnacle has only repaid $300 million of debt, making it hard to finance deals.

The owner of Duncan Hines and Aunt Jemima has only made one major acquisition since the Blackstone takeover — the $1.3 billion deal for Birds Eye in 2009. Pinnacle shut down Birds Eye’s headquarters in Rochester, NY, and eliminated 200 jobs.

“They saw themselves as a consolidator, but they really haven’t been,” a source said.

Meanwhile, the existing brands also have struggled. Pinnacle’s earnings before interest, taxes, depreciation and amortization are down 5 percent since 2010.

Blackstone, however, is taking advantage of the rising markets to bring Pinnacle public and get some breathing room, with the IPO proceeds going to pay debt.