Siemens' Infineon Offering Is In Demand
MUNICH -- Flush from surging demand for semiconductors in electronic appliances and rising computer-chip prices, the initial public offering for Siemens AG subsidiary Infineon Technologies AG is likely to be oversubscribed.
Market observers are expecting the volume to reach 5 billion euros ($4.93 billion), making it one of the largest IPOs in Germany this year. Shares will be listed in both Frankfurt and New York on March 13. Infineon's chairman, Ulrich Schumacher, said he believes the company stands a good chance of being included in Germany's benchmark stock index.
Infineon, which was spun off from Siemens last April as part of a restructuring of the Munich-based company's sprawling portfolio of businesses, is among the 10 largest microchip manufacturers in the world. Infineon posted a profit of 69 million euros for the year ended Sept. 30, on a 31% increase in sales to 4.2 billion euros. A year earlier, it posted a loss of 790 million euros on 3.2 billion euros in sales.
Strong Results in Quarter
Infineon issued strong results for the first quarter of the current fiscal year, well-timed for its IPO. Sales for the quarter rose 81% to 1.54 billion euros and pretax earnings jumped to 254 million euros, after a 52-million-euro loss in the year-earlier quarter. Mr. Schumacher said Infineon benefited from heavy demand for cellular phones during the holiday season, and warned that the next quarter will return to "normal."
Deutsche Bank and Goldman Sachs, managers of the IPO, said the emission price will be between 29 euros and 35 euros per share. Bookbuilding begins on Feb. 21, and private investors who make an early commitment will be given a discount of around 1 euro per share, Mr. Schumacher said.
As part of the initial public offering, Infineon's capital stock will be increased by 1.2 billion euros. A total of 150 million shares will be floated, and Mr. Schumacher expects that about 30% will be purchased by private investors, the rest by institutional investors.
Further Sales Possible
Siemens plans to sell 25% to 30% of its stake in Infineon. It plans to further reduce its stake in Infineon, but it hasn't decided when. Mr. Schumacher said a second tranche of Infineon shares could be floated in 18 months.
"Their timing is very good," said Theo Kitz, an analyst with Merck Finck, who believes that Siemens will be able to receive an "optimal price" for the IPO.
European makers of electronic appliances currently face a shortage of computer chips, as demand for high-tech phones, hand-held computers, digital set-top boxes and other devices forces semiconductor makers to ration chips for the first time in years. Chip foundries are running at near capacity, forcing semiconductor makers to make only limited allocations to device manufacturers.
Infineon plans to grow faster than the market. The semiconductor industry is forecasting 19% sales growth in 2000 and 16% for 2001, while analysts are expecting Infineon to achieve an annual growth rate of 30%.
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