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UPC's chello hits low note
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May 19, 2000: 5:24 a.m. ET
Dutch cable operator targets up to $4B from ISP share sale; stock tumbles
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LONDON (CNNfn) - Netherlands-based United Pan-Europe Communications (UPC) on Friday priced the sale of shares in its Internet service arm, chello, at the lower end of market expectations, valuing the unit at up to  4.6 billion ($4.11 billion).
UPC, Europe's largest broadband cable operator, said it would sell around 10 percent of chello's equity - 26.9 million shares -- at between 13 and 17 a share, with listings in Amsterdam and on Nasdaq.
The initial public offering comes in the wake of the dismal performance of a number of high-profile European Internet share sales in recent months. These have left firms such as fellow ISP World Online and U.K. online retailer lastminute.com (LMC) trading well below their IPO prices.
Falling expectations of the price UPC could ask for chello have weighed heavily on the cable company's shares, which have halved since their peak in March. UPC stock slumped almost a quarter to 21 in Amsterdam Friday, following the pricing announcement.
Chello had 180,000 subscribers by Mar. 31 in Europe, Latin America and Australia. The upper end of the pricing range values chello subscribers at around 2,500 each, less than half the price-per-subscriber implied by share valuations in flotations of dominant ISPs such as Deutsche Telekom's (FDTE) T-Online and Terra Networks of Spain.
UPC is 51 percent owned by Denver-based UnitedGlobalCom, while Microsoft (MSFT: Research, Estimates) has a 7 percent stake. UPC said the software firm would take a 3.5 percent stake in chello, and had an option to buy 10 percent. AT&T's (T: Research, Estimates) Liberty Media unit will also take 3.5 percent.
UnitedGlobalCom (UCOMA: Research, Estimates) shares on Thursday closed down 1-7/8 at 40-7/8. 
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