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UPS to deliver IPO
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November 8, 1999: 12:20 p.m. ET
World's biggest delivery firm to launch massive, blue-chip offering
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NEW YORK (CNNfn) - United Parcel Service, the world's No. 1 package delivery company, plans to sell shares to the public Wednesday in what would be the biggest intial public offering in U.S. history.
The stock sale would also be one of the most notable IPOs since Goldman Sachs debuted last spring.
By numbers alone, United Parcel Service is sure to draw attention. A UPS IPO will raise between $5.1 billion and $5.4 billion for 10 percent of the company.
The company, No. 46 in the nation in terms of revenue, is likely to have an instant market capitalization in the $51 billion to $54 billion range.
Atlanta-based UPS employs 333,000 people, making it the nation's fourth largest private employer.
But the most usual element for IPO watchers may be UPS's profitability. The delivery giant earned $1.7 billion in 1998 on $24 billion in revenue.
"We are not used to looking at a company this good," said Irv DeGraw, research director at World Financenet.com.
That said, few expect the company's shares, which will trade under the ticker symbol "UPS," to skyrocket.
"I would like to think they can get in the 20 percent range, but with that number of shares it could be difficult," DeGraw said.
Through lead underwriter Morgan Stanley Dean Witter, UPS plans to offer 109 million shares priced at $47 to $49, which was raised Friday from the initial range of $36 to $42 a share.
With the stock of FDX Corp., the parent of Federal Express' (FDX), trading in the 42-range, one analyst said UPS shares need to be priced to compete with its main rival.
"It's all going to come down to what the underwriters price the deal at," said Corey Ostman, chief technical officer at IPO Alert! "If it's higher than Fed Ex, the markets won't react well."
UPS is going public during the infancy of Internet commerce. As such, analysts see it and other delivery firms as poised to grow as more people buy products over the Web.
"They are a closet Internet company, much like Fed Ex." World Financenet.com's DeGraw said.
The rest of the lot
UPS, however, isn't the week's only noteworthy IPO.
Paul Allen's Charter Communications plans to sell 170 million shares in the $17 to $19 range.
The cable firm owned by Microsoft's co-founder is already drawing attention for its name recognition alone.
"The underwriter is probably going to raise the price range," IPO Alert's Ostman predicted.
Underwritten by Goldman Sachs, Charter will trade under the ticker symbol "CHTR."
Ostman will also be watching Edison Schools, "EDSN," a for-profit operator of public schools, which plans to offer 6.8 million shares in the $21 to $23 range.
"This is the first test of that business in the capital markets," he said.
Rounding out his list of IPOs to watch, World Financenet.com's DeGraw mentions Expedia, "EXPE," and Next Level Communications, "NXTV."
"Here comes a player that's got some substance behind them and it's not a giant deal," DeGraw said of Next Level, a broadband communications provider.
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