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EADS slips after IPO
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July 10, 2000: 6:58 a.m. ET
Shares in aerospace firm fall from 19-euro offer price amid profit concerns
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LONDON (CNNfn) - The European Aeronautic, Defense and Space Co., Europe's largest aerospace company, failed to get off the ground Monday after setting the price of its initial public share offering below analysts' original forecasts in the hope of raising some interest.
EADS shares fell 52 cents, or 2.7 percent, to  18.48 ($17.58) in early Paris trade on Monday. Its owners on Sunday announced it would sell the shares at 19 each.
EADS, being formed by the three-way merger of Aérospatiale-Matra, DaimlerChrysler AG's (FDCX) Dasa aerospace unit, and Spain's Contrucciones Aeronauticas SA, or Casa, will be the world's third-biggest aerospace company after Boeing Co., and Lockheed Martin.
"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 last week.
A month ago, analysts had said they expected the shares to go on sale in a price range between 23 and 29. But shares in Aérospatiale-Matra, which were viewed as an indicator of EADS's stock value because they have been exchanged for EADS shares on a one-for-one basis, fell to 19.70 in Paris on Friday, down more than 17 percent from a high of 23.92 on June 9.
EADS will own 80 percent of Airbus, the European airplane 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.
EADS sold 166.5 million shares at 3 billion ($2.85 billion), valuing EADS at 15.4 billion.
Shares of the Dutch-registered company, which is headquartered in Paris, trade on three bourses - Frankfurt, Paris and Madrid.
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 holds 5.5 percent. 
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