(Adds closing stock prices for Mead Johnson and Bristol)
By Phil Wahba
NEW YORK Feb 11 Mead Johnson Nutrition Co
(MJN.N) shares rose more than 10 percent in their debut
Wednesday, after the company launched the largest U.S. initial
public offering in nearly 10 months, and the largest globally
in 2009, even as the IPO market continues to struggle.
Shares of Mead Johnson, a unit of Bristol-Myers Squibb
(BMY.N) known for its infant formula brand Enfamil, started
trading on the New York Stock Exchange at $26, an 8.3 percent
premium over the $24 at which they were priced Tuesday
Mead Johnson closed at $26.43, up $2.43, or 10.13 percent,
in trading on the New York Stock Exchange, after rising as high
as $27.07 earlier in the day.
"We've had such a hiatus in the marketplace that when an
IPO comes along with a good footprint, investors feel good
about the name, and respond," said David Menlow, president of
advisory firm IPO Financial.com
In a statement, Bristol-Myers said the Mead Johnson IPO,
which raised $720 million, would allow it to strengthen its
capital structure and focus on its biopharma business.
Bristol-Myers will retain an 85 percent stake in Mead
Johnson, whose IPO had been expected to price between $21 and
$24, and has indicated it would keep a stake of at least of 80
percent for the foreseeable future. Bristol-Myers will also
keep the bulk of voting rights.
"We've operated separately on research and development and
sales," Mead Johnson Chief Financial Officer Peter Leemputte
told reporters on a conference call.
"We're ready to act as a stand-alone -- their interests are
completely aligned with ours," he said.
Bristol Myers Squibb's shares closed at $22.63 Wednesday,
up 36 cents, or 1.62 percent, on the New York Stock Exchange.
Mead Johnson plans to use the IPO proceeds to pay off loans
from other Bristol Myers subsidiaries, according to a
Mead Johnson is the first stand-alone company specializing
in pediatric nutrition to go public. Its main competitors are
Nestle SA NESN.VX, Abbott Laboratories (ABT.N) and Wyeth
The company sold 30 million shares, more than the 25
million it originally planned.
Underwriters, led by Citigroup (C.N) and Morgan Stanley
(MS.N), have the option to purchase another 3.75 million shares
to cover over-allotments, and stand to make fees of about $36
NO SIGH OF RELIEF
Mead Johnson's IPO broke a 12-week drought and was the
first to launch since online university operator Grand Canyon
Education Inc (LOPE.O) went public in November, and only the
second since August.
But it may be too soon to call an end to the worldwide IPO
With stock markets worldwide reeling from large declines
and high volatility since last summer, investors have become
risk averse, preferring established companies over new stock
In the United States, IPO proceeds fell 43 percent in 2008
from 2007, with worldwide declines of 71 percent over the same
But as a large, quickly growing company carved out of a
major multinational, Mead Johnson is not typical of most IPO
"This is not the all-clear signal to the industry," Menlow
Mead Johnson's IPO is nine times larger than the next
largest IPO in 2009 so far globally, an $80 million deal by
Etihad Atheeb Telecommunications Co, listed on the Saudi
There has not been an IPO in Europe this year, and
excluding Mead Johnson, there have only been 13 IPOs yielding a
total of $186 million worldwide.
By this point last year, there had been 66 IPOs worldwide
that raised proceeds of $6.8 billion, according to Thomson
(Reporting by Phil Wahba; Editing by Steve Orlofsky, Brian
Moss, Richard Chang, Gary Hill)
(email@example.com; +1 646 223 6128; Reuters