NEW YORK (CBS.MW) -- Shares of Conoco rose to 25 vs. its original price of 23 Thursday morning as DuPont's giant oil subsidiary made the biggest-ever debut for a U.S. company on Wall Street.
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The Houston company (COC), which is being spun off by DuPont (DD), sold 191.46 million shares to the public, 40 million more shares than originally estimated, at $23 each. That raised more than $4.4 billion in gross proceeds for Conoco, which surpassed the $3.03 billion raised by Lucent Technologies (LU) in a 1995 IPO as the biggest U.S. IPO ever.
The proceeds will be used to repay debt owed to DuPont.
William Smith, portfolio manager of Renaissance Capital's IPO Fund (IPOSX), said Conoco was able to attract interest despite the tough market because of its track record and high profile. Conoco had been a public company before being scooped up by DuPont in 1981. "Not only are people interested in big, well-recognized names, but the key word is safety," Smith said.
Smith also noted the company's expected 3 to 4 percent dividend payout as an attractive feature of the deal. Conoco's market value of about $14.9 billion at the offer price is "favorable," Smith added.
DuPont will hold more than 70 percent of Conoco's stock, which it hopes to spin off to its own shareholders in a tax-free transaction within 12 months.
Most of Conoco's investors are expected to be oil-oriented institutions, many of which backed it in its previous life. But Smith said the deal may also attract retail investors familiar with the Conoco name from its 7,900 gas stations.
Shares, which will be listed under the ticker "COC" on the New York Stock Exchange, have not yet opened for trading.
Regards
Neil |
