Seagram Revises Tropicana IPO Estimate

Seagram Co. said it will sell Tropicana Products Inc. to the public for as much as $2.86 billion, less than Chairman Edgar Bronfman Jr. expected, as it raises money to pay for its acquisition of PolyGram in a cooling market for equity sales.

The initial public offering of Bradenton, Fla.-based Tropicana, the world’s biggest juice company, could raise as much as $2.86 billion, Seagram said in a filing with the Securities and Exchange Commission. That’s 20% less than estimated in a SEC filing last month. Seagram plans to sell 124.5 million shares, or 95% of Tropicana’s common stock, at between $21 and $23.

At that range, the stock would sell at between 34 and 38 times 1997 earnings. Firms in the Standard & Poor’s index are selling at a combined 28 times earnings.

Seagram is selling Tropicana to finance its $10.6-billion purchase of PolyGram from Royal Philips Electronics.

Tropicana also intends to raise $600 million of debt concurrently with the offering. The combined stock and debt would value the firm at $3.48 billion, if the IPO prices at the midpoint of its range. On May 21, Bronfman said Tropicana was worth between $3.5 billion and $4 billion.

In a SEC filing on June 12, Tropicana said it expected to raise $3.57 billion, in what would have been the biggest IPO by a U.S. company ever. Just five days later, news reports said Montreal-based Seagram was accepting private bids for the business, suggesting it may have had second thoughts about relying on the weak IPO market to raise so much capital.

Seagram shares rose 25 cents to close at $40.38 on the New York Stock Exchange.