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Seagram Revises Tropicana IPO Estimate

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<i> From Bloomberg News</i>

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.

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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.

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

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