The IPO market can finally take down that closed-for-business sign, following the successful debut of Bristol-Myers Squibb Co.'s spinout of Mead Johnson Nutrition on the NYSE Wednesday. The first
initial public offering since November 2008 raised $720 million for the maker of Enfamil baby formula, but more importantly for Wall Street it showed that there is an appetite for offerings even in the midst of a recession.
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Moreover, the offering priced at $24 a share, the top of its expected
range, and the size of the sale was increased to 30 million shares from the
expected 25 million, just the kind of news venture capital and private
equity firms were hoping to hear -- even if this was a corporate spinoff of a well-established brand. After opening at $26, the stock tacked
on another 2.6% by the early afternoon.
With a glimmer of hope on the Street for IPOs, there may be more offerings this
quarter, but it's doubtful there will be many with equity markets
still in turmoil. What's more, 30% of the companies in the IPO pipeline dropped
out in the fourth quarter of 2008, and the trend continues with two companies whose IPOs were expected to price last night opting to postpone. Vehicle armor maker O'Gara Group and renewable fuel company Changing World Technologies Inc. both decided that discretion was the better part of valor, as it's still pretty clear that your revenues and growth prospects better be dazzling if you want to test the IPO waters nowadays. -
George White
See earlier Dealscape post on Bristol-Myers' prospects after Mead Johnson offering
See Dealscape post on IPO pipeline
