Blyth shares down as Moody's wary of IPO plan
Blyth Inc.'s shares plunged Friday after Moody's downgraded its outlook on the company that sells candles and weight loss products.
THE SPARK: Moody's Investors Service lowered its outlook on Blyth Inc. late Thursday to "negative" from "stable" on its concerns about the company's plans to spin off its weight loss products business and take it public.
The agency affirmed Blyth's junk-grade B2 corporate rating.
THE BIG PICTURE: Blyth said in August that it planned to spin off ViSalus, its weight-loss, energy-drink and nutritional-supplement business, through an initial public offering worth up to $175 million. The Greenwich, Conn.-based company also sells home accessories such as candles and fragrances through a catalog, online and at house parties.
Moody's said that Blyth's core candle and home fragrance business is struggling and will likely continue to do so in this economy. The company may suffer after a spinoff as the weight loss business, which has grown rapidly, helps offset that weakness. Additionally, Blyth already has a tight cash position that could be worsened by the split.
SHARE ACTION: Down $4.39, or 11 percent, to $34.51. Blyth's shares had risen 5 percent since it announced the plans for the IPO and hit a 52-week high of $46.15 on Aug. 16, the day the plan was announced.