|
Record IPO to hit Monday
|
 |
November 14, 1996: 9:51 p.m. ET
Deutsche Telekom will put 25 percent of company on market for $12 billion
From Correspondent Steve Young
|
NEW YORK (CNNfn) - The largest initial public offering ever will hit Europe next week when Deutsche Telekom takes about a quarter of the company public in an IPO valued at $12 billion.
The vast majority will be sold on the German Stock Exchange, but about 15 percent will be sold in the United States. While the deal is eagerly awaited in Europe, U.S. market watchers have their doubts.
Manish Shah, editor of IPO Maven, said the offering's enormous size will not guarantee its success in the U.S. stock market.
"It's way out of shape, way overpriced and (the company) is one of the least customer-friendly in the world. Its national and international markets are not protected," he said.
Analysts worry that when the European telecommunications market is deregulated in 1998, leaner and meaner companies will be able to rush in and steal much of the market share currently held by Deutsche Telekom.
Robert Natalie, new issues analyst at Standard & Poor's, said the biggest threat will come from British Telecom, which is a better play on the European market. (183K WAV) or (183K AIFF)
Analysts also dislike the company's $65 billion debt load, which is one of the highest in the world. They are worried that heavy job cuts may be necessary before the debt is eliminated. That will be tougher to do in Germany because of union and government protections.
Germans are hungering after the stock's 5 percent dividend yield, but U.S. investors would lose more than a quarter of that to taxes.
In Europe, demand for the stock far outstrips available shares, but some of the biggest Wall Street brokerages are expected to have trouble selling the 60 million to 95 million shares that will be offered on the New York Stock Exchange.
|
|
|
|
|
|
Global One
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
