* Metals USA shares close 8.6 pct below IPO price
* Analysts: investor appetite may have been overestimated
* Tengion IPO closes up 0.4 pct
(Updates with closing prices, adds details on Tengion IPO)
By Clare Baldwin
NEW YORK, April 9 Shares of Metals USA Holdings
Corp (MUSA.N) closed down about 9 percent on Friday, well below
their initial public offering price, and some analysts said the
pricing may have been too aggressive.
Meanwhile, shares of biotech company Tengion Inc TNGN.O
closed up less than a percent.
Metals USA closed at $19.20 and analysts said the
underwriters, led by Goldman, Sachs & Co, Credit Suisse,
JPMorgan, Morgan Stanley and Jefferies & Co, may have
overestimated investors' appetite for the stock.
"The people who bought it at $21 weren't long-term holders.
They decided to sell it. As soon as these things break people
are very quick to cut and run," said Morningnotes.com founder
Ben Holmes. "It was a very aggressive pricing."
Metals USA is a metals service center and sells processed
carbon steel, stainless steel, aluminum, red metals and
manufactured metal parts to customers in North America.
The Ft. Lauderdale, Florida-based company on Thursday sold
11.4 million shares for $21, raising about $239.4 million. It
had planned to sell about 10.5 million shares for $18 to $20
"They would have been better off leaving more of the money
on the table," said Eric Guja, an analyst with
Connecticut-based IPO research firm Renaissance Capital.
There was strong interest in the deal, both because of its
valuation and because of rising steel prices, Guja said.
Metals USA's original price range put it at a discount to
peers like Reliance Steel & Aluminum Co (RS.N), Worthington
Industries Inc (WOR.N) and Olympic Steel Inc (ZEUS.O). Its
final terms put it in line with Reliance, he said.
The company's net sales fell 49 percent to $1.1 billion in
2009 and net income fell more than 95 percent to $3.5 million.
It said demand for steel and other metals fell off sharply in
the third quarter of 2008 as the global financial crisis
pinched production and companies sought to sell off excess
Metals USA said proceeds from the IPO will be used to repay
2007 notes and for general corporate purposes.
Metals USA is 93 percent owned by private equity firm
Apollo Management LP [APOLO.UL]. Apollo planned to sell 1.6
million shares but was expected to retain just over a 60
percent stake in the company after the IPO, according to the
most recent prospectus.
Private equity firms have been taking advantage of improved
stock market conditions to take investments public after a long
Tengion closed up 0.4 percent at $5.02. Earlier on Friday
Tengion priced shares in its initial public offering below the
expected range but sold more shares than anticipated.
The company sold 6 million shares for $5 each, raising
about $30 million. It had planned to sell 4.4 million shares
for between $8 and $10 each.
The company is working on growing replacement organs and
Underwriters were led by Piper Jaffray and Leerink Swann.
Metals USA is trading on the New York Stock Exchange under
the symbol "MUSA." Tengion is trading on the Nasdaq under the
(Reporting by Clare Baldwin; Editing by Dave Zimmerman, Tim
Dobbyn and Bernard Orr)