Nutritional supplements seller ViSalus Inc filed to raise up to $175 million in an initial public offering and plans to use the proceeds to pay a special dividend, sending shares of majority stockholder Blyth Inc to a four-year high.
Blyth, which sells candles and home fragrance products under the PartyLite brand, will continue to own more than 50 percent of ViSalus after the IPO, the company said in a statement.
ViSalus said the special cash dividend will be paid only to its pre-offering stockholders and Blyth, which currently holds a more than 70 percent stake in the company, is expected to be a big beneficiary.
The IPO may do well depending on its pricing as ViSalus was profitable, but using proceeds to pay a dividend to insiders was not a good move, said Francis Gaskins, editor of IPOdesktop.com.
ViSalus, founded in 2005, sells weight management products, nutritional supplements and energy drinks in the United States through independent distributors, and earned $24.5 million in the six months ended June 30, 2012 on net sales of $327.3 million.
The company, which had about 1.26 million customers at the end of June, markets its products through the Body by Vi 90-Day Challenge, which encourages customers to lose weight over a 90-day period.
ViSalus expects to compete with companies like Herbalife Ltd and Weight Watchers International Inc.
The company's weight-management products, which include Vi-Shape meal-replacement shake and Vi-Trim Clear Control Drink Mix, form the bulk of its sales. The segment comprised 65 percent of net sales last year.