Dunkin’ Brands, Teavana Get Coffee-Stock Jolt

July 29 (Bloomberg) -- Rallies in Dunkin’ Brands Inc. and Teavana Holdings Inc. after initial public offerings this week reflected growing investor interest in providers of specialty coffees and teas.

The chart illustrates the trend with an index consisting of Starbucks Corp., Green Mountain Coffee Roasters
Inc. and a trio of smaller companies: Peet’s Coffee & Tea Inc., Caribou Coffee Co. and Coffee Holding Co.
The coffee-stock gauge soared 95 percent this year through yesterday, trouncing a 3.4 percent gain in the Standard & Poor’s 500 Index.

Starbucks, the group’s worst performer, rose 24 percent in advance of yesterday’s earnings report.
Dunkin’ Brands, the operator of Dunkin’ Donuts coffee shops, climbed 47 percent on the first day of trading July 27 after the Canton, Massachusetts-based company’s IPO. Teavana, a seller of loose-leaf teas that’s based in Atlanta, surged 64 percent the next day in its stock-market debut.

“Teavana is riding in the wake of what happened with Dunkin’ Donuts, and the parallels are coming out,” David Menlow, president of IPOfinancial.com in Millburn, New Jersey, said in a telephone interview yesterday. His firm has “buy” ratings on both companies. He doesn’t own shares of either.

The industry index assigned one-third weights to Starbucks and to Green Mountain, based on share prices at the end of last year. They had market values as of yesterday of $30 billion and $15.4 billion, respectively. Peet’s, Caribou Coffee and Coffee Holding collectively accounted for the other one-third of the
gauge, and each was weighted by its value as of Dec. 31.

Teavana IPO rises 64% on its first trading day, raised about $121.4 million

A day after coffee chain Dunkin' Brands Group Inc. rose nearly 47% following its initial public offering, tea retailer Teavana Holdings Inc. shot even higher, gaining 64% on its first day of trading.

Teavana and three other IPOs made their debuts Thursday; with a total of seven completed since Wednesday, it has been the busiest week for new stocks since February.

Teavana has raised about $121.4 million from its initial public offering of 7.1 million shares of common stock.
The offering was priced at $17 per share, above the $13 to $15 price range disclosed in a recent regulatory filing.  Teavana is offering about 1.1 million shares, while selling stockholders are offering approximately 6.1 million shares.

The company anticipates net proceeds of about $15 million, after estimated expenses as well the underwriter discount and commissions. Teavana plans to use the proceeds to redeem all outstanding shares of its Series A redeemable preferred stock and to pay back debt.

The underwriters have an option to buy up to an additional 1.1 million shares from certain selling shareholders to cover any excess demand. Teavana won't receive any proceeds from shares sold by the selling stockholders.

Teavana said it expects to have about 38 million shares outstanding immediately after the offering, according to the Securities and Exchange Commission filing.

Teavana's stock closed at $27.80 on the New York Stock Exchange, up from its IPO price of $17. A total of 7.1 million shares were sold at a price above the stock's expected pricing range of $13 to $15.

The company reported net income of $12 million and revenue of approximately $124.7 million for the fiscal year ended Jan. 30.

IPOs this week : July 25 - 29, 2011 (wk 30)

There are 11 IPOs scheduled for the week, making it the busiest since November 2007, according to IPO investment adviser Renaissance Capital. 

The heavy action is a continuation from last week, when Zillow Inc. (Z) and Skullcandy Inc. (SKUL) led a handful of companies into the public realm.

The influx in IPOs may be attributed to recent concern about the U.S. deficit, and the potential that capital may dry up if debate over the debt ceiling is not resolved.

One is ADS Tactical Inc., a U.S. defense supply-chain middleman specializing in tactical and operational equipment. The stock was expected to begin trading Friday under the proposed ticker “ADSI.”

The Virginia-based company hopes to raise $204 million by offering 12 million shares, valued at a price range of $16 to $18 apiece. ADS Tactical plans to list on the New York Stock Exchange with J.P. Morgan, Morgan Stanley, and Wells Fargo Securities as the main underwriters. Sweet said that the talks in Washington over the debt ceiling “may be having an impact,” though earlier signs shows strong demand for the shares.

C&J Energy is also generating some buzz, Sweet continued. The Houston-based provider of fracturing services for the oil industry is also looking to join the NYSE under the symbol “CJES.”

The company plans to raise $305 million, offering 11.5 million shares at a price range of $25 to $28 a share. J.P. Morgan is again the underwriter, along with Goldman Sachs and Citigroup.

Teavana Holdings is a specialty retailer of loose tea with 163 stores across the United States and 17 in Mexico. The Atlanta-based company will look to use the symbol “TEA” on the New York Stock Exchange. It is expected to offer 7 million shares priced between $13 and $15, in an effort to raise $100 million. Goldman Sachs and Bank of America Merrill Lynch are the lead underwriters.

Four more companies will be looking to trade on the Big Board.

Energy company American Midstream Partners (AMID), agricultural firm Union Agriculture Group (UAGR), aerospace-part distributor Wesco Aircraft Holdings (WAIR) and health-care organization WhiteGlove Health (WGH) would bring the total NYSE offerings to eight.

The Nasdaq market is set to add three companies.

Food-product distributor Chefs Warehouse, communication management-software provider Tangoe Inc., and pharmaceutical firm Horizon Pharma Inc. are all expected to make their debuts this week. Horizon’s offering comes as the company plans to commercially launch its two main products, treating ulcers and arthritis pain.

All the companies are surely hoping to see some of the success of last week’s IPOs. Zillow closed at a 71% premium, while Francesca’s Holdings FRAN -2.19% , a women’s clothing boutique, saw a 63% pop.

Originally there were 12 IPOs expected for the week; however, Orchid Island Capital, a finance firm, chose to postpone its deal.