IPOs: ECM issuance to gain from credit market weakness
"It will be a while before companies can start using the buyout market to secure tension for an IPO again"
For much of the past couple of years, ECM bankers have had to sit on the sidelines as IPO mandates slipped through their fingers as companies opted instead for sales to private equity buyers. The current weakness in the credit markets, which is making life difficult for leveraged buyouts, has, however, turned the tables. In October, Cadbury Schweppes announced that it planned to spin off its US beverage unit, the maker of Dr Pepper and 7 UP, after a seven-month search for a buyer was derailed by the credit market crunch.
Analysts had expected private equity companies to offer as much as $15.79 billion for the unit but a proposal turned down by Cadbury from a consortium including Blackstone and Kohlberg Kravis Roberts offered only $14 billion and required Cadbury to finance a third of the deal itself.
UK-based Cadbury, the world’s largest maker of confectionery and non-alcoholic beverages, will now list its Americas beverages division on the New York Stock Exchange in an IPO that is expected to value the company at $11.13