FOCUS-Thomson Multimedia (SBF:TMM) market debut dazzles
Reuters, Wednesday, November 03, 1999 at 14:55
(updates with closing price, adds company forecast)
By Sophie Walker
PARIS, Nov 3 (Reuters) - Consumer electronics group Thomson
Multimedia stormed higher on its first day of trade on
Wednesday, after a heavily oversubscribed Initial Public Offer
which traders attributed to its cheap issue price given the
company's profile.
Shares in Thomson Multimedia (SBF:TMM) closed up 34.98
percent at 29.02 euros in turnover of 169 million euros, while
the blue-chip CAC-40 closed up 0.39 percent. Analysts had
predicted a stock price of 28 euros over the next six months.
Market operators said on the basis of the company's current
acivities the stock was fairly valued between 25 and 26 euros.
But they added the shares had room to rise given Thomson
Multimedia's plans for development.
"I would say fair value was around 25 euros; the people who
are buying now are focussing on the company's plans for Internet
ventures, their interactive television guides and a telephony
joint venture with Alcatel (SBF:CGEP), which was maybe not in the
original valuation," said one senior trader.
The stock's issue price was fixed at 21.5 euros, the top end
of the reference range set by the Finance Ministry, and Thomson
Multimedia said the IPO had been 35 times oversubscribed by
institutionals and six times oversubscribed by retail investors.
The IPO came with a capital increase of 3.5-4.0 billion
French francs, valuing the company at between 14.6 billion to
17.5 billion francs, while market operators said its real value
was nearer 20 billion francs.
The issue had a total value of 457 million euros, or 17.1
percent of the company's capital. Thomson Multimedia will remain
majority owned by the state, with state-owned Thomson SA
retaining a stake of 51.7 percent.
Sources close to the operation said the main buyers were
institutional investors seeking to boost their original stake.
EXPANSION IN TUBES, DECODERS, SERVICES
Thirty percent of the shares offered went to French retail
investors and 20 percent to French institutionals. Outside of
France, 20 percent was sold to U.S institutional investors, 15
percent to U.K. institutions and 15 percent to institutional
investors in the rest of Europe.
Thomson Multimedia is the biggest single supplier of
televisions and VCRs to the United States, and the fourth
biggest in the world.
Its chairman Thierry Breton has said the company is in a
position to expand in three core areas -- television tubes,
building platforms for consumers including televisions, decoders
and DVD video players, and services, including programme guides.
CDC Bourse analyst Claire Agulhon said the global consumer
electronics market was being propelled by new products such as
DVD (digital video disk), but added competition was fierce.
"The company must continue to restructure," she said.
Thomson Multimedia's most profitable unit is its screens and
television components business, which had operating profit of
1.42 billion francs on sales of 12.85 billion in 1998.
The company has forecast 1999 net profits "around one
billion francs" against 102 million francs last year.
Analysts said the state should profit from the interest
surrounding Thomson Multimedia to quickly sell off another slice
of its capital.
"There's real demand -- the state is a majority shareholder
in a company which is more American than European," said one.
Alcatel, Microsoft (NASDAQ:MSFT) and NEC (TOKYO:6701) each hold a
6.8-percent stake in Thomson Multimedia and DirecTV, subsidiary
of Hughes (NYSE:GMH) has a stake of 5.2 percent. Employees hold 5.5
percent of the capital.
Societe Generale and Goldman Sachs International were joint
global co-ordinators of the sale.
(additional reporting by William Emmanuel)
33 1 4236 1072, paris.newsroom@reuters.com))
Copyright 1999, Reuters News Service |
