Vancouver-based pizza chain Papa Murphy’s will bring its familiar take-and-bake pizza concept into the world of public ownership with a stock offering Friday on the New York Stock Exchange.
The company announced an opening price to the public of $11 per share for Papa Murphy’s Holdings Inc., trading on the Nasdaq market under the symbol FRSH. The company will offer 5.8 million shares of the privately held stock, all held by Papa Murphy’s, according to a written statement issued Thursday. The statement also said certain sellers have granted the underwriters a 30-day option to purchase up to an additional 874,999 shares to cover an over-allotment or the sale of more securities than are available.
At the midpoint of the proposed range, Papa Murphy’s would command a fully diluted market value of $204 million. Jefferies, Baird and Wells Fargo Securities are managing the stock offering.
Papa Murphy’s first filed its IPO confidentially Dec. 16, then submitted its public filing to the U.S. Securities and Exchange commission March 11, initially hoping to raise $70 million.
The chain was created 19 years ago through a merger of Papa Aldo’s and Murphy’s Pizza. New York-based Lee Equity Partners owns 65 percent of the outstanding capital stock in the company purchased in 2010 from majority owner Charlesbank Capital Partners for an undisclosed price.
Papa Murphy’s hopes to secure the resources to expand its reach well beyond its 1,349 franchised outlets and 69 company owned stores in 38 states, Canada and the United Arab Emirates. In its filing the company sees potential for up to 4,500 outlets selling its products targeted at busy families who want healthy, inexpensive meals. It expects this year to grow by between 105 and 115 stores.
Papa Murphy’s is ranked in fifth place among all pizza chains in both sales and number of outlets. Its net losses — including a $2.6 million loss in 2013 — as well as a lack of national recognition and current unsettled relations with some franchisees are among the company’s challenges.
Papa Murphy’s take-and-bake concept was recently ranked by Market Force Information as No. 1– ahead of bigger chains such as Papa John’s, Domino’s and Pizza Hut– among consumers who would recommend the brand to friends and family, and for food quality, customer service, atmosphere and overall value.
