July 22, 2024

DealBook: Freescale Prices Its I.P.O. at $18 a Share

It hardly seems possible in the current environment where investors are clamoring for newly public companies like LinkedIn and Yandex.

But Freescale Semiconductor Holdings, the chip maker acquired in 2006 in one of the largest technology buyouts ever, cut the price for its offering to $18, people briefed on the matter told DealBook on Wednesday. That’s at the bottom of its already lowered price range.

Just recently, the company disclosed that its initial public offering could raise more than $1 billion. On Wednesday, Freescale raised just $783 million, reflecting weak investor demand.

Freescale is among a number of private equity-backed companies moving to go public in recent months, with buyout firms looking to exit deals they made at the height of the boom. A group of firms, including the Blackstone Group, TPG Capital, the Carlyle Group and Permira Advisers, bought Freescale in 2006 for $17.6 billion, a deal that was called “one of the ugliest buyouts ever.”

In many ways, Freescale looks like a number of private equity-owned companies that have recently gone public, including hospital operator HCA and Nielsen Holdings, the consumer ratings company.

Amid a heft debt load, Freescale has struggled to sustain profitability. Last year, the company notched a net loss of $1 billion in 2010, compared with a $748 million profit in 2009. The company, which sold 43.5 million shares on Wednesday, has said it plans to use the proceeds and cash on hand to help pay off its debt.

But investor interest for HCA and Nielsen was stronger. In early January, Nielsen priced its shares at $23, compared with earlier estimates of $20 to $22 a share. In March, HCA priced at the high end of its range.

By comparison, Freescale had to drop its price to attract investors. The offering of $18 a share came in far below initial expectations of $22 to $24.

Citigroup, Deutsche Bank, Barclays Capital, Credit Suisse and JPMorgan Chase are the main underwriters on the Freescale offering.

Article source: http://feeds.nytimes.com/click.phdo?i=cc8283e685168869cef133cbd6f6d575

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