Pactiv Evergreen shares dive in Nasdaq debut

September 17, 2020 11:00 AM

By Madhvi Pokhriyal and Abhishek Manikandan

(Reuters) - Shares of beverage and food packaging company Pactiv Evergreen Inc (NASDAQ: PTVE) fell as much as 23.1% on Thursday in their Nasdaq debut, after the company priced its IPO well below the target range.

Pactiv opened at $12.75 and fell to as much as $10.76, giving it a market valuation of $1.89 billion.

On Wednesday, the firm sold 41 million shares at an IPO price of $14 apiece, raising $574.4 million.

Earlier, the company had marketed a target range of $18 to $21.

Lake Forest, Illinois-based Pactiv produces and supplies food merchandising products and fresh beverage cartons to some of the major U.S. foodservice chains like McDonald's Corp (NYSE: MCD), Starbucks Corp (NASDAQ: SBUX), Shake Shack Inc (NYSE: SHAK) and retailers like Walmart Inc (NYSE: WMT).

"It is tough to build excitement around a food packaging company whose revenue is declining, that is burdened with a lot of debt, whose stock price is expensive even after it was set below the projected price range, and that might have FCPA (the Foreign Corrupt Practices Act) problems." said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

The company in 2010 became a part of Reynolds Group Holding Ltd, a global manufacturer and supplier of consumer food and beverage packaging products. Based on 2019 data, Pactiv is the largest producer of fresh food and beverage packaging in North America. (https://bit.ly/3muEa7k)

For the six months ended June 30, the company posted revenue of $3.26 billion, down 9.3% from a year ago. Its net income was $93 million, compared with a net loss of 24 million a year earlier.

Credit Suisse Securities, Citigroup Global Markets, BofA Securities and Goldman Sachs were the lead underwriters of the IPO.

(Reporting by Madhvi Pokhriyal in Bengaluru; Editing by Shailesh Kuber and Maju Samuel)

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