GNC again postpones $400 million IPO
General Nutrition Cos.' parent GNC Corp. has indefinitely postponed its initial public offering that was set for today, blaming market conditions and Thursday's foiled terrorist plot.
This marks the second time in two years that the nutritional supplements maker has backed way from going public. In 2004, a slowdown in the diet products markets caused GNC management to pull back.
"This isn't a reflection of the company at all, but market conditions have been so unfriendly to IPOs, particularly the last two weeks, then the London situation yesterday, so we decided to postpone," GNC spokesman Ben Pratt said Friday.
No date to return to the market has been determined, Pratt added. The company had hoped to raise $400 million through the stock offering.
Pulling an IPO is not uncommon this year. Thomson Financial said that 37 initial public offerings have been stopped short of selling this year. The IPOs that have gone through have not been performing well. On average, all IPOs in 2006 are down 2 percent from their offering prices, according to Renaissance Capital LLC, of Greenwich, Conn.
GNC's decision was a smart business move because the current market is not good for such offerings, said Melanie Hase, a Renaissance Capital analyst. While GNC wanted to price the shares between $16 and $18, investors were willing to pay only $13 to $14, Hase said.
"They (GNC) were not willing to sell at that price. They see room for improvement," Hase said.
GNC shares were to begin trading today on the New York Stock Exchange under the symbol "GNC." According to the prospectus filed Wednesday, GNC was to sell more than 23.5 million shares, including 9.4 million shares to be issued by the company and the remainder to be sold by current shareholders. An additional 3.5 million shares were made available to underwriters to cover overallotments, according to the prospectus.
After completion of the offering, GNC Investors LLC, GNC Corp.'s principal shareholder, was to hold more than 50 percent of the corporation's shares. Apollo Investment Fund V would hold more than 50 percent of the total voting power of GNC Corp. stock, the filing indicates.
GNC Corp. since 2003 has been owned by the private investment group Apollo Management, which acquired GNC from Royal Numico NV, a Dutch firm. That merger was a failure as Numico had hoped to gain a foothold in the U.S. by pushing its products through GNC stores, Hase said.
GNC Corp. filed for an initial public offering in 2004, but pulled back when a growing diet products market began slowing.
General Nutrition has more than 5,800 locations worldwide, including a mixture of company-owned and franchise stores. Sales for the year ending March 31 were $1.4 billion, with earnings before interest, taxes, depreciation and amortization of $129.2 million.
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