) majority-owned subsidiary Blackhawk Network Holdings disclosed
that it has altered the registration statement for its initial
public offering (IPO) with the Securities and Exchange
Commission. The company now expects to raise up to $220 million
from the IPO.
Last month, Blackhawk announced a registration statement filing
for the highly anticipated IPO of a minority stake. However, the
company did not disclose the number of shares and the price range
for the offering at the time.
The company has now priced 10 million shares at an estimated
offering price of $20 to $22 per share. The IPO will comprise
solely of shares by current stockholders, including Safeway. The
underwriters have an option to purchase another 1.5 million
Blackhawk provides prepaid products and payment services to
consumers through a network of retail store locations in the U.S.
and 18 other nations. Additionally, Blackhawk provides card
production services, a secondary market for prepaid cards and has
recently introduced digital wallet services. Blackhawk also has
gift card businesses in U.K. and Australia.
Investors have been looking forward to the IPO ever since Safeway
revealed its plan to spin off Blackhawk into a public company in
Sep 2012. Given the revival of growth trends and the recent
bullish run of the stock, the timing of the announcement is apt.
While Safeway has been on a strong uptrend, the stock is likely
to appear more valuable on the back of the announcement.
The spin off of its Blackhawk subsidiary reflects solid future
growth plans for Safeway. Following the public offering, we
expect the company to sharpen focus on its mainstream retail
operations and improve its competitive position against peers.
Safeway is expected to launch a Wellness initiative in the second
quarter of 2013 to tap growth opportunities in the fast growing
healthcare market in the U.S.
Given Safeway's solid growth potential, excellent fundamentals
and robust dividend growth rate, estimates for 2013 have been
rising over the last 60 days. Accordingly, the stock carries a
Zacks Rank #1 (Strong Buy). Other Zacks Rank #1 healthcare stocks
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