French Government Sets Share Price For Thomson Multimedia In IPO
Dow Jones Online News, Monday, October 18, 1999 at 14:29
By David Gauthier-Villars, Staff Reporter
NEW YORK -(Dow Jones)- The French government said Monday the initial
public offering of Thomson Multimedia will value the consumer
electronics company at between 2.23 billion euros ($2.43 billion) and
2.67 billion euros, three years after it was almost put on the block for
one franc.
The Finance Ministry said it has set a price of EUR18 to EUR21.5 a
share for the 21.1 million shares in Thomson Multimedia, which were to
be sold through an IPO starting Monday and closing Oct. 29.
The offering will be carried out through the sale of 19.1 milion
shares held by state-owned holding company Thomson SA and the sale of
two million new shares. In total, 17.3% of the company's capital will be
sold to the public in the share offering.
Thomson Multimedia, the world's fourth-largest television-set maker,
said these offers will be managed by Societe Generale and Goldman Sachs.
The Finance Ministry said that Thomson Multimedia shares should be
priced Nov. 2 and the stock should start trading Nov. 3.
The IPO will also include an offer of 1,910,670 shares to Thomson
Multimedia employees at a preferred price. After completion of the IPO,
Thomson Multimedia employees will hold 5.5% of the company.
Prior to completion of the IPO, Thomson Multimedia shareholders will
have to approve capital increases at a shareholder meeting on Oct. 29.
Thomson Multimedia Chairman Thierry Breton said investors have the
opportunity to invest in a company that has carried on a complete
restructuring of its businesses since the day it was valued,
symbolically, at one franc. "It's an entirely new Thomson Multimedia,"
Breton said.
Breton said although he is working in an industry where "everything
moves very fast," Thomson Multimedia's future earnings offer good
visibility with important recurrent revenue from licenses and patents.
The company hopes to post an operating margin of 6% to 7% in 2001
from 2.9% in 1998 and a net profit margin of 3% to 4%, Deputy Chief
Executive Franck Dangeard said.
Despite Breton's confidence in Thomson Multimedia's strengths, the
French state will remain the leading shareholder, cutting the stake it
owns through the holding company Thomson SA to 51.7% from 67.7%.
The privatization of Thomson Multimedia has been a thorny issue in
France since former Prime Minister Alain Juppe in 1997 offered to sell
the debt-ridden company to South Korean chaebol Daewoo Corp. for one
franc.
As of late 1996 Thomson Multimedia had amassed a debt of EUR2.36
billion. The company was later rescued by the socialist-led government
which injected EUR1.66 billion in the company. In 1998, the company
reported a net profit of EUR16 million on revenue of EUR5.65 billion.
Breton said the company is building up its development on three
pillars: a strong management team, strong brands such as RCA in the
U.S., and strong partnerships with its industrial shareholders. "No one
can do everything alone any more," Breton said.
In late 1998, the French government sold four 7.5% stakes in Thomson
Multimedia to Microsoft Corp. (MSF), French telecommunications equipment
supplier Alcatel SA (ALA), Japanese computermaker NEC Corp. (NIPNY), and
DirectTV, a unit of Hughes Electronics of the U.S.
In order to fast-track partnerships with these shareholders, Thomson
Multimedia has set up joint ventures, such as TAK, to develop
interactive television services with Microsoft and a 50-50 consumer
telecommunications unit with Alcatel.
Following the capital increase and the IPO, Microsoft, NEC and
Alcatel will hold stakes of 6.8% each. Direct TV won't follow the
capital increase, and its stake will thus be diluted to 5.2%, Breton
said.
However, he said U.S electronic program guide company Gemstar Intl.
Group Ltd (GMST) will use the opportunity of the IPO to bid for a stake
in Thomson Multimedia.
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