From Bloomberg, this AM:
UIH Valued Less Than Subsidiary UPC After Initial Offering
UIH Valued Less Than Subsidiary UPC After Initial Offering
New York, Feb. 13 (Bloomberg) -- United International Holdings Inc.'s market value
fell below that of its subsidiary, United Pan-Europe Communications NV after an
initial public offering, and investors aren't pleased.
United International, which owns 62 percent of UPC, the No. 1 Dutch cable-TV
company, ended trading Friday with a market capitalization of $1.97 billion while
UPC's was $4.8 billion.
The value comparison was made possible after the Denver- based United
International sold 38 percent of UPC in an IPO. The sale lured demand for 20 times
what was offered, yet United International shares fell 11 percent to 48 5/8. At the
same time, UPC rose 26 percent to 41 on its first day of trade. ''It's extremely strange
to me that with the offering being so successful that United International would go
down,'' said Cliff Greenberg, a principal in Baron Capital Management Inc., which
owns about 6 percent of United International's common stock. Baron bought more
shares Friday. ''Maybe someone is doing some incorrect math,'' he said.
At UPC's closing price, United International's stake in UPC is worth $3.16 billion
through the 77.1 million shares it continues to own in the company. That's still more
than its own market value.
Doesn't Make Sense
United International executives said they had no reason why the stock would fall,
and declined to comment further.
At UPC, the reaction was the same. ''It doesn't make sense to me,'' said Mark
Schneider, UPC chief executive. ''I don't see how that (United International's share
price) can be as low as that.''
Speculation during Friday trading was that United International's shares fell as
investors sold shares to invest in UPC, ananysts said. The reasoning was that UPC
is a better investment as a pure cable company with opportunities in Europe.
That still doesn't explain why investors overlooked the valuation gap between UPC
and its parent. ''If UPC is up, how is it mathematically that United International isn't
up,'' said Ted Henderson, a Janco Partners managing director of research who has
a ''buy'' rating for United International. ''It makes for an interesting look at United
International if UPC's price continues to hold up there,'' he said. |
