Revenge of the war IPOs
Integrated Defense Tech to sell 7M shares at $18 to $21 via CSFB.
February 23, 2002: 7:00 a.m. ET
By Luisa Beltran
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NEW YORK (CNN/Money) - Only Integrated Defense Technologies Inc., a major technology provider to the United States military, is braving the troubled waters of initial public offerings this week.
So far this year only eight companies have gone public, raising $2.4 billion, down from the 11 IPOs that raised $4.4 billon last year. The drought is affecting even those planning offerings, with only 19 companies filing to go public this year, according to data from Dealogic.
The Nasdaq's recent souring is causing the current IPO famine. The Nasdaq is down nearly 13 percent this year, analysts said.
"We have a downward slope on the Nasdaq, which is a barometer of the IPO market," said John Fitzgibbon, editor of IPO Desktop.
But the Nasdaq's fall probably won't affect the offering from Integrated Defense Technologies, which makes products used in military aircraft like submarines, battle tanks and missile systems. Customers also include Boeing Co., Northrop Grumman Corp., Raytheon Co. and General Dynamics.
The Integrated Defense Tech IPO is banking on war and the current administration's plans to increase defense spending. The government is expected to spend $379 billion on defense in fiscal 2003, the biggest increase -- 14 percent -- since the Reagan years.
Nearly 77 percent of Integrated Defense Tech's sales come, directly or indirectly, from the U.S. Government, the company said in a filing with the Securities and Exchange Commission.
Huntsville, Ala.-based Integrated Defense Tech is also profitable. The company posted $26 million in operating income on $264 million revenue for the year ended Dec. 31 compared to nearly $15 million in operating income on $181 million revenue for the prior year.
A war surplus
The sector for defense-related IPOs is also hot. United Defense Industries Inc., which makes and designs combat vehicles, naval guns and missile launchers, rose 4 percent in its market debut in December. Shares for United Defense (UDI: down $0.48 to $27.12, Research, Estimates) are up nearly 43 percent from their $19 offer price.
ManTech International Corp. gained nearly 14 percent in its market debut earlier this month. Mantech's (MANT: down $0.50 to $18.50, Research, Estimates) stock is now up 15 percent from its $16 IPO price.
Only a surge in pacifism could dislodge Integrated Defense Tech's IPO and the current war in Afghanistan will likely keep that fear in check. "Love will probably not rear its head to ruin this deal," said Industry Analyst Ben Holmes. "We are counting on the world keeping its love in check."
Holmes expects a 20 to 30 percent premium on the Integrated Defense Tech offering. IPO Desktop's Fitzgibbon has given the offering a three star rating and sees a $2 gain on the deal.
As the only IPO this week, according to MCM EquityWatch, the company also won't have much competition. Integrated Defense plans to sell 7 million shares at $18 to $21 each via Credit Suisse First Boston.
The IPO is expected to price Tuesday and trade Wednesday under the New York Stock Exchange symbol IDE.
The offering is also backed by Veritas Capital Management, a private equity firm, which will own nearly 60 percent after the IPO. 
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