Sexton Foods - John Sexton & Co. Goes Public

John Sexton & Co. Goes Public

On November 16, 1960, John Sexton & Co issued 200,000 shares (26.76%) of the 747,437 shares outstanding at $16.50 per share in the over the counter market (NASDAQ) to become a public company. 33,000 of the shares represented new financing of the company for use as working capital. The 200,000 share offer were oversubscribed and closed at $16.50 per share. Hornblower & Weeks was the managing underwriter. The financial structure of the company had evolved from its humble beginnings as a partnership formed in Chicago in 1883 to a public company with 747,437 shares outstanding with 72% held by family members and 26.76% held by the public.

The desire for John Sexton & Co. to go public was to gain better access to the commercial credit market. The Sexton Management saw opportunity to expand product lines and distribution networks, but its capital structure as a private company limited its borrowing capacity. As a public company, Sexton capital stock could be issued to purchase other grocery companies and fund expansion. In addition, the Sexton family held the majority of their wealth in the private John Sexton & Co. stock. Some family members wanted a publicly traded stock which could easily be sold at a true market price. The alternative was to try to sell their Sexton shares to another family member at a negotiated price.

In 1961 John Sexton & Co. had over 1,400 employees including 300 salesmen who were generating $49.5 million. 10 Sexton distribution warehouses were located in Atlanta, Chicago, Dallas, Detroit, Englewood, NJ, Indianapolis, Newton, MA, Pittsburgh, Philadelphia and San Francisco, CA. Sexton serviced over 50,000 customers located throughout the USA of which 40% were restaurants, 28% were schools and colleges and 32% consisted of clubs, hospitals, convents and hotels. The Sexton catalogue included over 2,250 food and non-food items of which 26% were manufactured in Sexton manufacturing facilities located in Indianapolis and Englewood, NJ. The rest of the Sexton products were manufactured by non-affiliated third parties. The Sexton delivery fleet consisted of 112 trucks and tractor-trailer-combinations of which 95 were owned by the company and the remainder leased. In certain areas of the country, Sexton utilized common carriers to delivery their products. Sexton was focused on meeting the rising demand from their customers as America began to embrace away from home eating as entertainment. To meet the increase demand, Sexton began modernizing their warehouses and manufacturing facilities.

As of June 30, 1961 John Sexton & Co was generating $49.5 million in sales and the balance sheet had current assets of $15.4 million with liabilities of $4.9 million including $3.9 million of long term debt, $1.0 million of accounts payable and working capital of $10.5 million consisting of short term revolving credit lines. Book value was $16.57 per share. Dividends had consistently been paid since 1935 and in 1961 were paying $0.90 per share.

In July 1961, Franklin Sexton, secretary of the company, son of John Sexton, died at age 70. He had begun his career on State Street store in 1909 working for his father, John Sexton, as a Teamster making grocery deliveries in Chicago by horse and wagon. He oversaw the expansion of the country division, expansion of Sexton's national distribution network, the building of the Sexton plant on Illinois & Orleans and led the Sexton coffee and tea product lines. His career spanned over 50 years. He is buried at Calvary Cemetery in Evanston, IL.

On October 4, 1961, John Sexton & Co conducted a secondary offering of 70,000 share of stock at $23.50 per share at the request of the Ethel Sexton Marten Family and the Franklin Sexton Estate. The Marten family sold 49,924 of 50,924 shares and the Franklin Sexton Estate sold 20,076 of 57,436 shares. Hornblower & Weeks was the managing underwriter. The Marten family, led by sons John S. Marten and Harry Marten, left the company and purchased Fred's Frozen Foods, a food manufacturer located in Noblesville, Indiana.