(Adds analyst comment, background on Bristol)
NEW YORK Feb 10 (Reuters) - Mead Johnson Nutrition Co's (MJN.N) initial public offering Tuesday raised $720 million, exceeding expectations and making it the largest IPO in nearly 10 months, but the deal won't necessarily mean a thaw in the U.S. IPO market.
The company, known for its infant formula brand Enfamil, priced its IPO on a day that saw the Dow Jones industrial average fall 4.6 percent-- its biggest one-day percentage drop since Dec. 1 -- in conditions hardly conducive to pricing a new stock.
"The high end pricing of Mead Johnson showed that despite a tough environment for IPOs, and a tough day on the markets, IPO investors are willing to pay for a high quality IPO," said Scott Sweet, managing director of research firm IPO Boutique.
The deal also broke a 12-week drought and was only the second IPO to price in six months.
Brutal stock market conditions have essentially shut down the IPO market. In 2008, IPO volume in the United States fell 43 percent, its slowest year since 2003, as the markets hit all time volatility highs and the S&P 500 index fell 39 percent.
Despite the Mead Johnson IPO, Sweet cautions it doesn't necessarily mean the IPO market's woes are a thing of the past, as investors will still prefer stocks of companies they already know over new companies.
"It's not going to open up the IPO pipeline," Sweet said. "But depending on the stock's performance in the medium term, it could cause some IPOs to attempt a pricing."
The Bristol Myers Squibb (BMY.N) unit, which makes infant and children's nutrition products, sold 30 million shares at $24 a share, a source familiar with the matter said. The price was within the expected range of $21 to $24.
The company had originally estimated it would sell 25 million shares, before raising that by 5 million on Tuesday.
Mead Johnson's IPO is the largest since American Water Works Co's (AWK.N) $1.36 billion deal last April, and the first since online university operator Grand Canyon Education Inc (LOPE.O) went public in November in a $145 million IPO.
The company had sales of $2.174 billion for the nine months ended Sept. 30, 2008, up 14 percent over the year earlier period.
Indiana-based Mead Johnson most likely benefited from its lineage, Sweet said, allowing investors to have a better sense of its track record.
"The affiliation to Bristol Myers Squibb is icing on the cake," Sweet said.
Bristol Myers Squibb will keep about 85 percent of Mead Johnson shares, and the bulk of the voting rights, according to a regulatory filing.
About 14 percent of its overall sales are made through Wal-Mart Stores Inc (WMT.N).
The underwriters, led by Citi (C.N) and Morgan Stanley (MS.N), have the option to purchase up to another 3.75 million shares to cover-over allotments within 30 days.
The company plans to list on the New York Stock Exchange under the symbol "MJN," and begin trading on Wednesday. (Reporting by Phil Wahba; editing by Carol Bishopric, Gary Hill)