Restaurant chain Noodles & Co shares double in debut

Fri Jun 28, 2013 4:35pm EDT

(Reuters) - Shares of fast casual restaurant chain operator Noodles & Co (NDLS.O) more than doubled in their market debut, valuing the company known for its Pad Thai and Mac & Cheese dishes at as much as $1.07 billion.

Noodles shares were up nearly 96 percent at $35.20 in late morning trading on the Nasdaq on Friday. They rose as much as 121 percent to $39.70, and ended the day at $36.75.

The initial public offering, the first from any restaurant this year, was a blockbuster despite a volatile market that has led several companies to cut the size of their IPOs or scrap them altogether.

"The whole sector has done well last year and it is growing incredibly," said Francis Gaskins, a partner at IPO research company IPODesktop.com, told Reuters.

Restaurant stocks that have gone public in the last year have done well. Outback steakhouse operator Bloomin' Brands Inc (BLMN.O)'s stock has more than doubled since its debut last August.

Chuy's Tex Mex restaurant operator Chuy's Holdings Inc (CHUY.O) stock has tripled in value, while Steakhouse operator Del Frisco's Restaurant Group Inc (DFRG.O) has risen 67 percent since their debut in July 2012.

Noodles, which advertises under the slogan "A world of flavors under one roof," said its revenue jumped about 76 percent to $300 million between 2008 and 2012. Net income from operations grew seven-fold to $16 million. The company's long-term debt stood at $93.7 million, as of January.

"It has good visible top line growth and investors are starved for that kind of growth which is profitable," Gaskins said.

The Broomfield, Colorado-based restaurant operator, known for its signature dish Truffle Mac or "fancy pants," is looking to tap growing fast food demand among young diners.

Noodles, founded in 1995, is headed by Kevin Reddy, former chief operating officer of burrito chain Chipotle Mexican Grill Inc (CMG.N).

The company owns and operates 343 restaurants, including 52 under franchise arrangements, in 26 states and the District of Columbia, according to its latest filing.

Private equity firm Catterton Partners would hold about 36.7 percent of Noodles after the IPO.

Noodles raised $97.2 million by selling 5.4 million class A shares at $18 per share, above the top end of its increased price range of $15 to $17 per share.

The company, which plans to use the proceeds for working capital, debt repayment and for corporate purposes, listed Morgan Stanley and UBS Securities as lead underwriters to its offering.

(Reporting By Neha Dimri in Bangalore; Editing by Sreejiraj Eluvangal and Joyjeet Das)

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