Saint-Gobain risks IPO market listing for Verallia

France“s Saint-Gobain plans to brave tough conditions in the European market for initial public offerings and list its glass packaging unit in order to focus on home and construction products.
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France“s Saint-Gobain plans to brave tough conditions in the European market for initial public offerings and list its glass packaging unit in order to focus on home and construction products. The glassmaker said it would sell 40% of Verallia to investors, raising up to EUR 958 million (USD 1.4 billion). It could raise the amount to 46% if demand was strong enough, leading to proceeds of as much as EUR 1.1 billion (USD 1.6 billion.) A banker close to the deal said the indicative IPO price range published on 7 June 2011 of EUR 29.50 to EUR 36 per share was a discount to main listed competitor Owen-Illinois. Europe“s IPO market has had a difficult year. More than 15 deals were pulled and many of those which got done are now trading below their offer price. This has made investors increasingly skeptical about taking part in new share sales unless they come with a considerable discount. Verallia, which makes bottles and jars for food and drink products, said it would extend its business into emerging markets and look at acquisitions there as it grapples with slow recovery in its European markets. A spokesperson for Saint-Gobain said in a statement that the Verallia IPO was “the final step in Saint-Gobain“s strategic decision to refocus on the habitat and construction markets”. Verallia“s combined net income was EUR 242 million last year on net sales of EUR 3.55 billion. The group claims it achieved further net sales growth in the 1Q of 2011, driven by both volume growth and further improvement in prices. The company plans to pay out 40% of net profits in dividends to shareholders from next year. The IPO offering is set to close on 20 June 2011 with shares expected to start trading on 22 June.