DALLAS (AP) – Shares of Dean Foods Co. fell Friday to a yearlong low after the dairy processor announced it would sell new stock, which would dilute the value of current shares.
Dean said it will sell about 18.7 million shares in a public offering that is expected to close next Wednesday. The offering will increase the number of shares outstanding by about 13 percent.
The Dallas-based company also reiterated its earnings forecast for the first quarter and all of this year. It said the stock offering would have only a "modest impact" on profit for the year.
In morning trading, the shares were down $1.81, or 7.9 percent, to $21.18. They have traded between $22.71 and $50.50 in the past year.
Dean said it will use proceeds from the stock offering to pay off debt and for general corporate purposes, including future investments or acquisitions.
The company said it began 2008 about a year behind its debt-reduction expectations due to an "extremely difficult" operating environment in 2007.
Like other food companies, Dean has struggled with skyrocketing grain costs. Grain is used to make animal feed and shows up indirectly in the cost of milk.
Dean repeated its previous guidance of expecting to earn between 15 cents and 20 cents per share in the first quarter and at least $1.20 per share for all of 2008.
Analysts surveyed by Thomson Financial expect the company to earn 19 cents per share in the first quarter and $1.30 per share for the year.
Dean processes and sells brand-name and private label dairy products such as milk, ice cream and yogurt, and its WhiteWave Foods division makes soy products and organic dairy goods.
Copyright 2008 The Associated Press.