Travelers Gives Details of IPO

Citigroup Inc.’s Travelers Property Casualty unit on Friday filed for an initial public stock offering, likely to be the largest for a U.S. insurance company.

The IPO, which had been previously announced, could raise as much as $5 billion, investors said.

Citigroup’s Travelers unit, in documents filed with the Securities and Exchange Commission, didn’t give details on how it hopes to price the IPO, but did provide some new financial information.

Citigroup expects to sell a 20% stake in Hartford, Conn.-based Travelers via the IPO, which is slated to be completed before March 31. The rest of the car, home and business insurance company would be spun off to Citigroup shareholders by year’s end.

Travelers would pay a $1-billion dividend to Citigroup before the IPO. Travelers also would provide itself with some extra protection from the rising costs of asbestos insurance payouts: Under terms of the spinoff, if Travelers records more than $150 million in unexpected, additional asbestos-related charges in any one fiscal year, Citigroup would cover the amount, up to a limit of $800 million, after tax.

Insurance stocks generally have fared well in the aftermath of the Sept. 11 terrorist attacks because the losses suffered by many insurers have triggered sharp rate increases likely to boost earnings in 2002 and 2003. That expectation could mean strong demand for the Travelers offering.

Nonetheless, Citigroup Chairman Sandy Weill wants to jettison Travelers because insurance is a slower-growing business than other financial entities under Citigroup’s roof, analysts said.

The Travelers offering is likely to be the fourth-biggest U.S. IPO, behind AT&T; Wireless Services Inc., Kraft Foods Inc. and United Parcel Service Inc.

Last year, Travelers had net income of $1.07 billion, down from $1.3 billion in 2000. Revenue rose to $12.2 billion from $11 billion.

The company will seek to have its shares trade on the New York Stock Exchange under the symbol TAP/A. Salomon Smith Barney, another Citigroup division, will underwrite the sale.

Citigroup shares rose $1.35 to $45.49 on the NYSE Friday.

Russian Company’s

IPO a Success

A Russian dairy and fruit juice company made its debut on the New York Stock Exchange on Friday and got a solid reception from investors.

But a biotechnology firm abruptly canceled its IPO scheduled for Thursday evening, amid waning demand for biotech shares.

Russia’s Wimm-Bill-Dann Foods saw its new shares surge $3.10, or 16%, to $22.60 in their first day of trading on the NYSE. The company sold 10.6 million American depositary receipts at $19.50 each late Thursday.

Wimm-Bill-Dann, founded a decade ago, is Russia’s biggest juice and dairy food company. It sold shares to raise money for debt reduction and to buy more factory space.

The company is set to benefit as Russians drink more milk and eat more yogurt, boosting consumption that is among the lowest in Europe. Investors didn’t seem rattled by reports that some of the company’s principals are linked to Russian organized crime.

Wimm-Bill-Dann is the fifth Russian firm to have a full U.S. stock listing. The shares trade under the ticker symbol WBD.

Another company expected to sell stock Thursday--NeoGenesis Pharmaceuticals Inc., a protein research firm--canceled its deal.

NeoGenesis, which this week cut the asking price for its shares by almost a third to lure investors, formally withdrew its filing with the SEC.

In the wake of some biotech firms’ recent failures to bring to market once-promising drugs, “There’s a real reluctance among people to step forward,” said Stephen Flaks, a private investor who recently closed his Flaks Partners hedge fund that invested in biotech stocks. “It’s one of worst periods I’ve seen for some time.”

Bloomberg News and Reuters