UPDATE 2-National Beef unexpectedly postpones IPO

Thu Dec 17, 2009 1:13pm EST

* National Beef had expected to price shares on Thursday

* Underwriter says delay is indefinite

* Thin margins in beef industry a concern-analyst (Adds company statement, analyst's comment, byline)

By Phil Wahba

NEW YORK, Dec 17 (Reuters) - National Beef Inc NBP.N unexpectedly postponed its initial public offering on Thursday, citing weakness in the IPO market.

The beef processing company had planned to offer 17.25 million shares for between $15 and $17 each after the close of markets on Thursday, for expected proceeds of about $276 million. The shares were to list on the New York Stock Exchange on Friday under the symbol "NBP."

National Beef attributed its decision to "current weakness in the IPO market" and gave no indication of when or if it would make another attempt to go public.

The company, based in Kansas City, Missouri, was due to get about one-third of the proceeds of the IPO and the balance was to be used to buy back shares.

"With $356 million in debt, the company will still be highly leveraged after the IPO because some of the proceeds are going to repurchase shares from the founding members," Morningstar senior equity analyst Mike Taggart wrote in a research note earlier this week.

Competition in the beef sector is fierce, which may also have investors questioning the company's future profitability, said analyst Matt Therian of investment firm Renaissance Capital in Connecticut.

"The beef industry is not a high-margin industry, and investors were wondering if its high-margin initiatives were sustainable," Therian said.

National Beef's decision to postpone its IPO was made in a week during which four new issues came to market, but all priced below expectations.

Last week, of eight IPOs on the calendar, four were canceled or postponed.

National Beef said in a prospectus that had been filed with the U.S. Securities and Exchange Commission that it is one of the largest U.S. beef processing companies, accounting for about 14 percent of federally inspected steer and heifer slaughter in the fiscal year ended Aug. 29.

The IPO's lead managers are Bank of America Merrill Lynch (BAC.N) and Credit Suisse (CSGN.VX). (Reporting by Phil Wahba; Editing by Lisa Von Ahn)

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