FOCUS-Palm raises IPO price range to $30-$32/shr
(adds 3Com share price, details)
By Jeremy Pelofsky
WASHINGTON, Feb 28 (Reuters) - Palm Inc., the maker of the popular Palm Pilot hand-held computer devices, on Monday more than doubled the projected price range for its upcoming initial public offering to $30-$32 per share from $14-$16 a share in response to heavy investor demand.
The company, a wholly-owned unit of 3Com Corp.(NasdaqNM:COMS - news), now expects to net $663.8 million from the sale of 23 million shares of common stock in the offering, according to an amended prospectus filed with the Securities and Exchange Commission.
After the offering, there will be approximately 562.2 million shares outstanding in Palm, putting its initial market capitalization at about $17.4 billion based on a $31 per share initial price, the midpoint of the new range.
3Com shares traded as much as $4 higher in after-hours trading after closing on the Nasdaq stock market at 79-1/16, down 1-5/8 during the regular trading session Monday.
3Com will hold 532 million shares immediately after the offering. It plans to divest its holdings within six months by distributing the shares to 3Com shareholders.
America Online Inc. (NYSE:AOL - news), Nokia Corp. (NYSE:NOK - news) and Motorola Inc. (NYSE:MOT - news) have agreed to purchase about $225 million worth of Palm shares at the initial public offering price.
Palm said it would use the net proceeds from the IPO to pay at least a $50 million dividend to 3Com, repay about $58 million to 3Com, capital spending, increased marketing, and potential investments and acquisitions.
If Palm nets more than $620 million from the offering and private placements, 3Com can elect to receive an additional dividend of up to 50 percent of the aggregate net proceeds in excess of the $620 million, the filing said.
That would equal $184.4 million based on the new $31 per share midpoint of the projected price range.
In the six month period ended Nov. 26, Palm had $435 million in revenue and posted $22.5 million in net income, the filing showed.
The company, based in Santa Clara, Calif., has received approval to list its shares on Nasdaq under the symbol ``PALM' (NasdaqNM:PALM - news) once it goes public, now slated for March 2.
The underwriters, Goldman, Sachs & Co., Morgan Stanley Dean Witter, Merrill Lynch & Co. and Robertson Stephens have been
granted the option to purchase an extra 3.45 million shares of common stock in the event of heavy demand. |
