Despite Two Winners, IPO Market Getting Much Colder (MJN, LOPE)

The IPO market could optimistically be called “Dwindling.” It seems that the trend for withdrawn IPO’s is trumping new filings as the norm rather than actual deals making it to market.  We have only had two real IPOs since last summer, but both performed well since coming on the market.  It makes one wonder if firms have a good defensive model that can hold up if they should bite the bullet and  price their deals.  Today’s market caution has dried up the demand for just about all new issues.

Mead Johnson Nutrition Co. (NYSE: MJN), which went public earlier this month, has  fared well.  This 30 million share sale priced at $24.00, and that was at the top of its range.  The Bristol-Myers Squibb spin-off closed Thursday at $28.56.

Grand Canyon Education Inc. (NASDAQ: LOPE) priced its 10.5 million share IPO at $12.00 in November.  The price range for the IPO was lowered and it the original backers sold most of the shares.  This closed at $17.13 Thursday and rose another 10% after the company reported earnings.  It turns out that this one is in the economic sweet spot as it offers online graduate and undergraduate degree programs in education, business, and healthcare.

O’Gara Group Inc. has postponed its pending initial public stock offering indefinitely.  The maker of armored cars and military security systems was supposed to come public this month, but the market has not cooperated.  The original range of $17 to $19 for 8 million shares of stock was cut to $14 to $16, but now this one has been mothballed.

Changing World Technologies Inc., a producer of diesel fuel oil and fertilizers from organic waste, also postponed its IPO this month due to poor market conditions.

Other IPO’s which have been withdrawn this month are Third Wave Acquisition (SPAC, hotel?), Vitamin Shoppe (retail vitamins and health products), Big West Oil Partners, L.P. (independent refiner), TherOx (medical device), and Tensar (construction site solutions).

JON C. OGG
February 20, 2009