Card Giant MasterCard's IPO Set For End Of May
(You don't sell off the golden goose til it stops laying the golden eggs eh? Are they worried about new legislators in november putting more scrutiny on them?)
By Lynn Cowan
Of DOW JONES NEWSWIRES
Credit card issuer MasterCard Inc. plans to price its IPO between $40 and $43 a share when it sells a $2.8 billion stake in the company later this month.
A total of 61.5 million shares of Class A common stock, or 46% of the company's stock, is slated for the initial public offering some time in the fourth week of May. If there is sufficient demand, an additional 4.6 million shares will be sold in an over-allotment tranche, according to an updated prospectus filed by the company Wednesday.
If MasterCard succeeds at pricing its deal at the high end of its range, the Purchase, N.Y., company would be valued at $5.8 billion.
All but $650 million of the money raised in the IPO will be used to buy a portion of the Class B common stock stakes held by current owners of the closely held cooperative, who are members or affiliates of MasterCard's credit card network. About 30% of the proceeds will go to members and affiliates who are also underwriting the deal - including Wall Street underwriters JP Morgan Chase & Co. (JPM) and Citigroup Inc. (C). The remaining $650 million will be used to increase the company's capital, defend it in legal and regulatory proceedings, and for other general corporate purposes.
The deal, which is being lead-managed by Goldman Sachs Group Inc. (GS), will trade under the symbol MA on the New York Stock Exchange. It was originally scheduled to debut in the first quarter, but was delayed until this quarter when the company's chief executive officer, Robert Selander, underwent surgery for prostate cancer.
MasterCard also released its first quarter financial results in its latest prospectus Wednesday, showing revenue increased 12% to $738.5 million, and net income increased 37% to $126.7 million, compared to the same period of 2005. The number of transactions processed grew during the quarter; revenues were also aided by new fees that were added and increases in some existing fees beginning in April 2005.
The company expects to report a net loss in the second quarter and for the full year of 2006 due to expenses associated with the donation of 13.4 million shares of Class A common stock to The MasterCard Foundation. Although the foundation is a private charitable foundation, the expense is not tax-deductible.
MasterCard cites a number of risks in its prospectus, including increased regulation and legal scrutiny related to the interchange fees it and other credit card issuers levy. The company also expects Standard & Poor's to lower its credit rating because MasterCard will lose its right to impose special assessments on its members after it becomes a public company.
MasterCard plans to pay a small annual dividend of 36 cents a share. At the high end of its share price range, the dividend yield would be slightly below 1%.
- By Lynn Cowan, Dow Jones Newswires; 202-862-3548; lynn.cowan@dowjones.com
(END) Dow Jones Newswires
May 03, 2006 12:23 ET (16:23 GMT)
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