UPS IPO Valued at $5.47 Billion
ATLANTA (AP) _ It’s not a dot.com or a high-tech outfit. But United Parcel Service, which delivers many of the goods bought online, is expected to soar as high as many hot technology stocks when it begins trading publicly Wednesday.
The 92-year-old Atlanta-based company’s debut on the New York Stock Exchange will be worth $5.47 billion, the biggest domestic IPO to date. Lead underwriter Morgan Stanley Dean Witter said Tuesday that the company’s 109.4 million shares _ about 10 percent of available stock _ priced at $50 a share.
The offering easily surpasses the previous largest domestic IPO of $4.40 billion when oil company Conoco Inc. went public in October 1998.
Analysts say the world’s biggest package carrier is an instant blue chip on Wall Street, which likes the company’s strong performance record and prospects for snaring a sizable portion of the business delivering products sold over the Internet.
In 1998 UPS reported net income of $1.7 billion on revenues of $24.8 billion.
``It’s a premier company,″ said Cameron McLennan, a logistics and transportation analyst with Scott and Stringfellow in Richmond, Va. ``It’s a brand-name type company. This is an IPO of a company with a history.″
UPS plans to use the IPO to raise money for acquisitions, particularly as it gears up for an expected surge in online sales.
Helane Becker, an analyst with Buckingham Research Group, called UPS ``a transportation Internet stock.″
``They’re a really very strong company and always have been,″ she said, adding that UPS enjoys profit margins higher than its main competitors, FedEx and Airborne Express. Mutual funds also will like having a new company to choose when it comes to the package delivery and logistics sectors, she said.
``The investment community, especially people who manage big-cap funds, really haven’t had a lot to choose from,″ Ms. Becker said. ``You had FedEx among the big-caps and that’s about it.″
Wall Street wasn’t alone in getting excited about the IPO.
Employees and retirees, who own about two-thirds of the company, could see the value of their stock increase significantly.
While UPS was prohibited from discussing the offering by the Securities and Exchange Commission’s mandatory pre-IPO ``quiet period,″ its drivers were not.
``I’m pretty excited, but I wished I owned more (stock),″ said Clarence Witchard, a UPS driver from suburban College Park who began buying shares two years ago. ``It’s going to be a big one, especially for management.″
To herald the IPO, the company has received permission to close Wall Street, where it will drape the stock exchange with a UPS banner and park a Boeing 727 fuselage on the street along with a small fleet of its vehicles.