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Agere IPO raises $3.6B
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March 27, 2001: 5:30 p.m. ET
Lucent unit comes in at low end, sells 600 million shares at $6 each
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - Agere Systems Inc., the microelectronics unit of Lucent Technologies, finally priced its much anticipated IPO Tuesday, raising $3.6 billion, and setting the stage for the year's biggest debut.
Agere Systems sold 600 million shares at $6 each via lead underwriter Morgan Stanley Dean Witter. The company had planned to sell 600 million shares at $6-to-$7 each.
CNNfn.com first reported news that Agere would price Tuesday, which surprised many as the deal was set for Wednesday. Underwriters on the deal were tallying up orders and had set a 2 p.m. ET cut off time Tuesday to see if they had enough for "a book" on the deal, sources told CNNfn.com.
The IPO was initially slated to raise $7.4 billion, which would have made it the biggest U.S.-based new issues since AT&T Wireless's (AWE: Research, Estimates) $10.6 billion offering last year. Now, at $3.6 billion, Agere will rank as the fifth-largest domestic offering, behind Goldman Sachs (GS: Research, Estimates) $3.7 billion float but ahead of Charter Communications Inc. (CHTR: Research, Estimates)'s $3.2 billion deal.
 In February, Agere revised its planned offering for the second time and said it expected to sell 500 million shares at $12-to-$14 each via Morgan Stanley Dean Witter.
Allentown, Pa.-based Agere designs and makes optoelectronic components for communications networks and integrated circuits for computer equipment, and is a leader in sales of communications semiconductors. Agere plans to trade under the New York Stock Exchange symbol "AGR.A."
"The Agere IPO is so dependent on the health of Lucent and Agere," said Ben Holmes, president of IPOpros.com.
Holmes predicts that the Agere IPO will trade flat and questioned how the offering's lead underwriter, Morgan Stanley, could support the IPO since it holds a green shoe option. Morgan has the right to buy and then sell 90 million Agere shares, after the IPO, in exchange for some Lucent debt.
"Given the size of Morgan Stanley's position and the impetus to sell these shares, it will take a tremendous amount of aftermarket buying to lift this deal," Holmes said. "I just can't see where that will come from."
Shares for Lucent Technologies (LU: Research, Estimates) lost 29 cents to $11.70 Tuesday.
QK pulls IPO
Separately, QK Healthcare finally withdrew its planned IPO late Monday. QK Healthcare, a wholesale distributor of selected healthcare products, pulled the offering because of poor market conditions, the company said in a letter to the Securities and Exchange Commission.
The QK IPO had been on calendar throughout early March, postponed last week and then formally pulled the offering Monday.
Ronkonkoma, N.Y.-based QK had planned to sell 11 million shares at $14-to-$16 each, down from its plan to offer 15 million shares, via lead underwriter Lehman Brothers.
QK had expected to trade under the New York Stock Exchange symbol "KRX." 
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