From today's Chicago Tribune:
DIVINE'S DECISION DRAWS
CRITICISM
ANALYST SAYS MARKET WON'T BE
HOSPITABLE TO PLANNED JUNE IPO
By Rob Kaiser
Tribune Staff Writer
May 30, 2000
The decision by Divine Interventures Inc. to reject the
advice of its lead underwriter and try jumping into a
rough market for initial public offerings is being met with
critical reviews.
Last Friday, Lisle-based Divine replaced lead
underwriter Credit Suisse First Boston with investment
banking firm Robertson Stephens. In an e-mail to Divine
board members, Andrew "Flip" Filipowski, Divine's
chief executive, acknowledged that a main reason was
because CS First Boston wanted to further delay the
firm's IPO, which was originally set for March.
In contrast, Robertson Stephens is "enthusiastic in their
belief that Divine is one of the few that has the ability to
go public successfully in this market," Filipowski wrote.
Divine plans to resubmit documents related to the public
offering by Wednesday to the Securities and Exchange
Commission, begin its road show to potential investors
the week of June 12 and go public between June 22 and
29, according to the e-mail.
Jeff Hirschkorn, senior marketing analyst with New
York-based IPO.com, believes Divine is making a
mistake by going forward, even though the company has
the backing of some high-profile investors, including
Microsoft Corp. and Dell Computer Corp.
"In this market you can have George Bush behind it; it's
not going to make a difference," Hirschkorn said. "It's
just your model. . . . Only the best and seasoned
companies will do well. A company like Divine is a very
questionable model. If some of their investments go
south, what happens to the company?"
Hirschkorn said the split between Divine and CS First
Boston is a clear sign the investment banker didn't have
confidence that the public offering would fly.
In his e-mail, Filipowski noted that several people
working on the Divine account at CS First Boston had
recently left the firm. CS First Boston wanted to hold the
IPO until late summer or fall, he wrote. Officials with the
investment banking firm couldn't be reached for
comment during the holiday weekend.
Hirschkorn believes Divine should pull its IPO, rebuild
its business model and seek money from other investors,
away from the technology-weary public markets.
Divine, which takes significant investments in Internet
companies and offers them a suite of legal, real estate
and public relations services, has already started shifting
and cutting back its ambitious plans.
The company laid off 29 people earlier this month in its
partner development unit, which evaluates future
investments. Those cuts were made because the firm is
scaling back its investments as a result of previous
delays of the IPO, according to company insiders.
During an interview Saturday, Filipowski said he expects
Divine will have more layoffs and a "delay indefinitely" in
the development of its planned headquarters at Goose
Island if the company can't go forward with its public
offering.
"If we were to not raise any more money, there would
be a lot more people we would let go," he said.
The first phase of the Goose Island project, a $62.9
million, state-of-the-art development, was supposed to
be completed by September, but Divine officials have
pushed back that time frame.
Divine also has been shifting how the firm presents itself
to potential clients and investors.
Originally, Divine planned to spin out each of its service
companies, including those for public relations (Buzz
Divine), strategic consulting (Experience Divine) and real
estate (DotSpot Divine). Now, company officials talk
about maintaining these independent firms but lumping
together their services for customers and eventually for a
public offering.
Divine is also putting more emphasis on helping existing
companies beef up their e-commerce operations, in
addition to its focus on accelerating the growth of
dot-com companies.
Divine hopes to raise between $150 million and $200
million with its IPO, while concurrently receiving an
additional $300 million from corporate backers.
Len Batterson, chairman and chief executive of
Chicago-based Batterson Venture Partners LLC, said
he's surprised that Divine isn't holding back its IPO for a
stronger market.
"They may feel there's been so much publicity about the
fact that they are going to do an IPO that not doing so
would kind of harm their credibility," Batterson said. |
