Market volatility forces Saint-Gobain to postpone IPO
There was great interest from both retail investors and institutional investors, with enough orders for up to 90 per cent of the offer, a source close to the matter told FoodProductionDaily.com.
However, the timing for the IPO was poor, said the source.
Two factors
The Greek crisis was one of two major factors contributing to the postponement, creating anxiety and uncertainty in investors, said the source,.
The profit warning posted last week by Verallia’s competitor Owens-Illinois (OI) also stirred up concerns, they said.
The bottling giant projected a 3-6 per cent profit drop for 2011 second quarter net earnings compared to the year before.
However, OI’s warning applied to markets that didn’t necessarily affect Verallia, the source said.
OI’s supply chain business in US, which is not an issue for Verallia, they said.
In addition, OI has a presence in Asia where Verallia has little activity.
With the market going down every day, it’s not good climate for investors as everyone is now going to be extremely cautious, said the source.
The pricing of the IPO was expected to occur yesterday, two weeks after the opening of the offer, which started on June 7th.
The source said they could not give an indication to when the IPO would be resumed, but said it was unlikely to take place now until at least after the summer period.
However, Saint-Gobain is not in any rush to sell stock, the source said.
The group doesn’t want to sell Verallia cheaply as it is a valuable asset to the firm, they added.
Bad news for big companies
The postponement is not of great concern for very small size companies which are listed currently on the French stock exchange, although it doesn’t send out a very good signal to blue chip companies that may be interested in an IPO, they said.
More than 15 European IPO deals have been pulled this year, according to Reuters.
However, many companies that have managed to float their shares have seen poor aftermarket performance, with investors demanding greater discounts for new offerings, said the news source.
Initial announcement
This is not the first set back Saint-Gobain has met in its attempt to sell or spin off the unit.
The company revealed a strategy to focus on the habitat and construction market as early as 2007.
But in 2008, CEO Pierre-Andre de Chalendar postponed an attempt to sell the unit because of the onset of the financial crisis.
“After three difficult years, the general business environment in 2011 is more likely to ensure that the packaging sector – which demonstrated its fundamental robustness during the crisis – will be valued at a price that reflects its true worth,” said Chalendar.
