Annie’s IPO Surges on First Day

Investors are hungry for this organic packaged-food deal

   

Annie’s (NYSE:BNNY), which is a top brand for organic packaged foods, fed investors’ appetite for hot IPOs today. The company priced 5 million shares at $19, which was above the $16 to $18 range. In today’s trading, the stock is up over 72%. The lead underwriters included Credit Suisse (NYSE:CS) and JPMorgan Chase (NYSE:JPM).

Annie Withey co-founded Annie’s back in 1989 because she wanted to build a company focused on healthy — and delicious — foods. The first product was macaroni and cheese, which turned into a big hit.

But to turn the company into a national brand, Annie hired John Foraker as the CEO in 2004. It was a smart move. He wasted little time in moving into new categories. Annie’s is now the No. 1 natural and organic brand for macaroni and cheese, snack crackers, fruit snacks and graham crackers.

In fact, the product lines now include over 125 offerings, and they’re available in more than 25,000 retail locations in the U.S. and Canada. Distribution partners include Costco (NASDAQ:COST), Target (NYSE:TGT), Wal-Mart (NYSE:WMT) and Whole Foods (NASDAQ:WFM).

Annie’s takes a mission-driven approach to its business. This includes a commitment to environmentally sustainability efforts and a transparent corporate culture. It’s the kind of thing that has made companies like Chipotle (NASDAQ:CMG) and Starbucks (NYSE:SBX) big successes.

Growth has certainly been strong at Annie’s. From 2007 to 2011, revenues went from $65.6 million to $117.6 million. Income from operations came to $15.1 million last year.

And the market opportunity is also enormous. The U.S. market for organic food came to about $40 billion in 2010. Based on today’s trading, investors sure are hungry for Annie’s share.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook,” “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.


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