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EADS IPO prices low
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July 9, 2000: 6:06 p.m. ET
Profit concerns push aerospace company to price at 19 euros
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NEW YORK (CNNfn) - European Aeronautic Defense and Space Co. priced its initial public offering Sunday at  19, the low end of the expected range for the newly formed aerospace giant that owns most of aircraft maker Airbus.
That price values the offering of 166.5 million shares at 3 billion ($2.85 billion) and values EADS at 15.4 billion ($14.6 billion), according to a company spokeswoman.
EADS, being formed by the three-way merger of Aérospatiale-Matra, DaimlerChrysler AG's (FDCX) Dasa aerospace unit, and Spain's Contrucciones Aeronauticas SA, will be the world's third-biggest aerospace company, after Boeing Co. and Lockheed Martin.
Analysts expected the price range to be 22 to 24. The offering was two times oversubscribed as institutional investors rushed in to capitalize on the low offer price, a source told Reuters. Retail investors accounted for just over half of the demand, down from the 60 percent that had originally been slated.
Shares of the Dutch-registered company headquartered in Paris, begin trading Monday on the Frankfurt, Paris and Madrid stock exchanges.
On the Paris exchange, Aérospatiale-Matra shares, which will be exchanged for EADS stock on a one-for-one basis, were widely viewed as an indicator of EADS's value. The stock traded at 19.70 at mid-afternoon Friday, down more than 17 percent from a high of 23.92 June 9.
"The worry with this is that 50 percent of its revenue is coming from Airbus, and the commercial airline business has never made a lot of money for anyone," Howard Wheeldon, an analyst at Prudential-Bache, told CNNfn.com Friday.
EADS will own 80 percent of Airbus, the European aircraft maker that is challenging Boeing's world domination of the civil airliner market.
"Bringing together three companies causes huge problems, from management to the way they trade currencies," Wheeldon said. "Investors must decide if they really want just a European company or a global company like BAE Systems [which owns 20 percent of Airbus Industrie]. EADS is being sold at a 20 percent premium to BAE."
On a pro forma basis, EADS's 1999 operating profit was 1.3 billion on sales of 23.1 billion. Airbus accounted for 54 percent of the company's sales.
The company had planned to raise between 3 billion to 3.5 billion by selling its 166.5 million shares for as much as 24.
Because only 80.3 million of those shares were newly issued, proceeds for EADS totaled 1.6 billion ($1.52 billion) the company said in a statement issued Sunday night.
DaimlerChrysler will own 33 percent of EADS, French state holding company Sogepa will have 16 percent, France's Lagardère SCA, BNP Paribas SA and Axa SA will hold a combined 15 percent, and Spanish state holding company Sepi 5.5 percent. 
-- from staff and wire reports
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