The IPO Buzz: Hogging the Limelight

HCA Holdings (HCA – proposed), a private equity-owned company, plans to price 124 million shares at $27 to $30 each to raise $3.5 billion. That’s most of the week’s IPO action. The deal is set to be priced on Wednesday night, with trading expected to start on Thursday morning. The company will offer 87.7 million shares; selling shareholders will offer 36.3 million shares.
 
The Nashville-based company believes it is the largest non-governmental hospital operator in the United States. It has a portfolio of 162 hospitals and 104 freestanding surgery centers across 20 states throughout the United States and in England, according to its prospectus.
 
A Fluid Situation
HCA has a history of being taken private (in 1989), going public (in 1992), taken private again (in 2006) and making another go at going public this week.
 
As a result of its size and the company’s leading position in its industrial sector, securities analysts and the financial media have been all over HCA and its IPO.
 
HCA does have some baggage coming to market. IPOs from private equity-owned companies were not exactly in favor until this year’s successes. HCA’s balance sheet shows long-term debt of $27.6 billion. And there have been concerns over HCA’s future revenue flow. About 41 percent of it comes from Medicare and Medicaid.
 
Nevertheless, pricing is the key to a successful offering and, at its filing range, this appears to be favorable.
 
Among others, Morningstar (MORN), the Chicago-based provider of independent investment research, recently issued a report giving HCA’s stock a fair value estimate of $32 per share. At press time, its expected pricing range is $27 to $30 per share.
 
Second Time Around
The other deal on the calendar is making a second attempt to go public.
 
MagnaChip Semiconductor (MX – proposed), a Seoul, South Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, plans to price 9.5 million shares on Thursday night at $15 to $17 each to raise $152 million. The IPO is expected to start trading on Friday, March 11.
 
The company will offer 950,000 shares and selling shareholders will offer 8.55 million shares.
 
MagnaChip makes semiconductors for cellphones, televisions and personal computers. Its biggest customer is LG, South Korea’s consumer electronics powerhouse.
 
The company initially planned to price 7.5 million shares at $15.50 to $17.50 each to raise $123.8 million during the week of June 28, 2010. The deal was postponed on June 30th “due to market conditions.”
 
It’s a far different stock market today than it was at the end of June 2010. On July, 2, 2010, the Nasdaq Composite Index closed at its year’s low at 2,091.79, DOWN 26.8 percent from 2,859.12, it previous closing high set on Oct. 30, 2007. By Friday’s close, on March 4, 2011, the Nasdaq ended at 2,784.67 — UP 33.1 percent from last July.
 
For those who take note of unusual numbers, consider this: MagnaChip is scheduled to start trading on March 11, 2011.
 
Only time will tell whether those turn out to be lucky numbers.
 
 
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.