Kraft disappoints investors on first day
Wednesday as its shares eked out only a small gain in their debut
one day after an $8.7 billion...
Kraft Foods Inc. delivered investors a bland first course on Wednesday as its shares eked out only a small gain in their debut one day after an $8.7 billion initial public offering. The biggest U.S. food maker's performance indicated that underwriters for this year's second-largest U.S. IPO had priced the shares in the food unit of tobacco giant Philip Morris Cos. at the top end of the range the market would digest. "It's an underwhelming situation that is a disappointment in spite of Kraft's opening premium," said IPOfinancial.com's David Menlow, whose Millburn, New Jersey-based firm tracks stock offerings. Late Tuesday, underwriters in the deal raised the price of 280 million shares, or 16 per cent of the company, to $31, up from an earlier projected range of $27 to $30. The stock began trading 50 cents higher to $31.50 on the New York Stock Exchange.After an early gain of as much as 3 percent, the shares fell back. They closed up less than 1 per cent, or 25 cents, to $31.25 on volume of 65 million shares. Kraft will use the money raised to pay down debt owed to tobacco parent Philip Morris Cos. for the acquisition of biscuit and cracker maker Nabisco last year. Source: Reuters